TOKYO (Reuters) – Japan’s economy likely expanded in the fourth quarter at the same upbeat pace as initially reported, a Reuters poll showed, reinforcing the central bank’s case for a further interest rate hike in the near term.
The Cabinet Office is expected to show gross domestic product (GDP) growth at 2.8% on an annualised basis in the three months to December 31, the same as the advanced reading released on February 17.
The revised numbers would translate into a quarter-on-quarter expansion of 0.7%, also unchanged from the preliminary figure.
The Bank of Japan raised short-term interest rates in January to their highest in 17 years, and growth momentum in the world’s fourth-largest economy will be among the key factors determining its rate hike path this year.
The BOJ’s quarter point January rate hike to 0.5% is most likely to be followed by another 25-basis-point increase sometime in the third quarter, a Reuters poll showed.
The revised fourth-quarter GDP data is expected to show that capital expenditure, a barometer of private demand, slowed down to 0.3% growth from 0.5% expansion in the initial estimate.
Still, analysts say it is not necessary to become pessimistic about the slower capex.
“The underlying trend of growth has not changed, and this does not alter our judgement that capital investment is gradually picking up,” said Shinichiro Kobayashi, principal economist at Mitsubishi UFJ Research and Consulting.
No major revision to the preliminary figures for private consumption, which accounts for more than half of economic output, was expected, Kobayashi said. It increased 0.1% in the initial reading, which beat a market estimate at that time but cooled from the 0.7% rise of the previous quarter.
The GDP data will be announced on Tuesday at 8:50 a.m. (Monday 2350 GMT).
Elsewhere, Japanese household spending was expected to have climbed 3.6% in January year-on-year. On a seasonally adjusted, month-on-month basis, though, spending probably dropped 1.9%.
The January household spending would be higher from a year ago because of pent-up demand in car sales, which was disrupted by automakers’ certification misconduct, said Takeshi Minami, chief economist at Norinchukin Research Institute.
Still, he added that “with the rate of increase in prices continuing to exceed the rate of increase in wages, households’ belt-tightening inclination remains strong.”
The internal affairs ministry will release the household spending data on Tuesday at 8:30 a.m. (Monday 2330 GMT).
Separate data from the Bank of Japan will likely show that the corporate goods price index in February fell 0.1% month-on-month, the poll predicted. The index, which measures prices of goods companies charge each other and will be published on Wednesday at 8:50 a.m. (Tuesday 2350 GMT), likely jumped 4.0% compared to a year ago.
Japan’s current account is projected to fall to a deficit of 230.5 billion yen ($1.56 billion) in January from a surplus of 1.077 trillion in the previous month, according to the poll. The finance ministry is expected to release the data on Monday at 8:50 a.m. (Sunday 2350 GMT).
($1 = 147.5900 yen)
(Reporting by Satoshi Sugiyama; Editing by Shri Navaratnam)
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