TOKYO – Japan’s economy grew at a slightly faster pace than initially estimated in the October-December quarter due to stronger-than-expected capital spending by companies, government data showed on Friday.
The economy expanded at an annualized pace of 1.9% in the final quarter of 2018, faster than the initial estimate of 1.4% growth. In non-annualized terms, the economy grew 0.5% from the previous quarter, compared with the preliminary figure for a 0.3% expansion.
The data confirmed that the Japanese economy recovered from a temporary setback caused by natural disasters that hit the country last summer. But some economists warn that uncertainties surrounding the global economy, especially in China, could disturb Japan’s growth path.
Japan’s “corporate profits have fallen as weakness in the Chinese economy started to accelerate the slowdown in the global economy,” said BNP Paribas economist Ryutaro Kono. “It is quite possible that the Japanese economy contracts again in the first quarter.”
Ahead of the release of the revised growth figures, the Cabinet Office said on Thursday a key economic indicator for January was “signaling a possible turning point,” which by the office’s definition means the economy may have peaked a couple months earlier.
Friday’s revised figures showed that domestic demand added 0.8 percentage point to growth in the October-December quarter. Private sector capital spending rose 2.7% from the previous quarter, compared with an initial estimate of a 2.4% increase. A recent finance ministry survey had pointed to stronger capital expenditure in the quarter, leading economists to expect an upward revision to the overall data.
Private consumption increased 0.4%, compared with the initial estimate for a 0.6% rise.
Meanwhile, net external demand subtracted 0.3 percentage point from growth.