- Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute
Japan's economy slowed less than initially thought in the last quarter of 2015, though the country remains on the brick of falling into another recession despite Prime Minister Shinzo Abe's attempts to underpin growth. Revised data for gross domestic product showed the world's third biggest economy shrank at an annualized pace of 1.1% in the December quarter from the previous three-month period, compared with the initial estimate of a 1.4% contraction. Private consumption was the main drag on Japan's economy in the reported period, dropping a revised 3.4% on an annualized basis, from an originally estimated 3.3%. However, growth in business investment was revised up to an annualized gain of 6.3%, compared with the 5.7% increase initially reported. For the whole of 2015, the Japanese economy came to a revised 0.5% from an initially estimated 0.4%.
The moribund economic backdrop will keep the Bank of Japan under pressure to further expand monetary stimulus. However, policy makers may refrain from bold measures when they meet next week for a rate review, after introducing negative interest rates in January. Moreover, weak growth could boost market speculation that Abe may postpone a second consumption tax hike to 8% from 8% scheduled in April next year.
© Dukascopy Bank SA