Japan averts technical recession as revised fourth-quarter data shows economy grew 0.4%

Commuters walking at Shibuya Crossing, Tokyo

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Japan averted a technical recession as revised official data on Monday showed the economy returned to growth in the the October-December period last year.

Japan’s gross domestic product expanded 0.4% in the fourth quarter compared with a year earlier. Provisional data last month had showed GDP contracting 0.4%. This is after a revised 3.3% slump in the July-September period.

The Japanese economy also expanded 0.1% in the fourth quarter from the previous three months, compared with the provisional data that showed a 0.1% contraction. The economy had shrunk 0.8% in the third quarter from the previous three months. 

A GDP contraction for a second straight quarter may have muddled the case for interest rate normalization for Bank of Japan Governor Kazuo Ueda.

Hopes of an upward revision were boosted after Ministry of Finance data released last Monday showed capital expenditure rose 16.4% in the fourth quarter from a year earlier, and 10.4% on a seasonally adjusted quarterly basis.

High inflation has crimped domestic demand and private consumption though, underscoring the fragility of growth in the country. Reuters reported the Bank of Japan is likely to downgrade its assessment on consumption and factory output at its next policy board meeting on March 18-19, citing three people with knowledge of the matter.

This is breaking news. Please check back for more updates later.

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