Japanese authorities surprisingly revised down the economic growth in the third quarter. The growth was revised to 1.3% from initially reported 2.2%. The adjustment is due to the decrease in cost of business in the stock of private companies. The expectations of the economists was for growth of 2.3%.
Meanwhile the government’s forecast for gross domestic product (GDP) generally increases due to changes in the way the measure it is calculated. On a quarterly basis, the Japanese economy grew by 0.3%, which is also a lower value than the original (0.5%) and forecasts (0.5%). Business costs decreased by 0.4%, while the preliminary data showed zero change and analysts’ expectations were for growth of 0.2%.
The new methodology for calculating GDP should help Prime Minister Shinzo Abe to achieve its goal to expand the economy to 600 trillion JPY (5.7 trillion USD). It is unlikely to solve the problems of the Japanese economy in recent years wandering between modest growth and contraction.
The domestic consumption and income growth remain weak. The exports, on the other hand, shows signs of recovery and companies in the sector should be supported by the depreciation of the yen against the dollar due to the win of Donald Trump’s presidential election in the US.
The business confidence in Japan weakened and companies are more cautious when it comes to spending. Despite the weakening of the yen, there is still uncertainty in the US and Europe and this prevents companies to make investments. Furthermore, the potential growth of the Japanese economy remains low.
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