Japan’s GDP Growth Rose In Q4, Monetary Stimulus Continues

Japan has exceeded the initial estimate in the last quarter of 2017 compared to the initial forecast. Mainly, this was due to the upward adjustment of the capital expenses and inventory data, that confirms growth for eight successive months.

The demand for technological products has also pushed higher the investments in the majority of the high-end sectors including, autos, precision types of machinery and semiconductors that moves along with the trend on major export countries in Asia.

However, even if the growth has been strong for the past 28 years, it might be difficult for the nation to end the monetary stimulus, considering also the slow wage that inhibits more consumer spending and inflation from further increase.

On one hand, the BOJ Governor, Haruhiko Kuroda, who still has another term, disturb the market following the announcement of possibility in exiting the monetary stimulus of two percent target inflation since this was achieved in fiscal 2019.

Yet, Yoshimasa Maruyama, the chief economist at SMBC Nikko Securities, said that it would take some time before the two percent target can be reached in reference to unstable growth implied by the gross domestic product (GDP) data in consideration of global economy’s expansion. He also noted that inflation is the main factor in exiting the QE but there is no drive as it lacks private consumption and low wages despite an increase in capital spending.

Private consumption represents 60 percent of the GDP that increased by 0.5 percent from three months to December which did not change the initial reading. Meanwhile, the domestic demand accounts for 0.4 percentage points modify the GDP while the next exports did not affect the numbers are the value of exports minus imports were balanced, according to data.