The release of Japan’s GDP data Wednesday gave an encouraging sign for the health of the Japanese economy.
The country’s growth domestic product (GDP) expanded an annualized 2.4 percent compared with the previous quarter, passing the 1.5 percent print expected by most economic analysts. In the October-December quarter, the economy expanded 1.5 percent during the quarter after contracting in both the second and third quarters of 2014.
Japan’s economic growth was better than predicted and helped lift the Nikkei to a nearly one-month high of 20,207, an increase of about 0.8 percent.
Private Consumption Down
According to some strategists, private consumption may be helping to drive the GDP advance as Japanese households, burdened by a tax hike, lower real wages and higher prices, have been cutting back on their spending.
In addition, an increase in capital expenditure for the first time in four quarters, helped push up the quarterly numbers.
“Consumption ought to accelerate from here…” Nicholas Smith, a Japan strategist at CLSA, told reporters. “I’ve placed a lot of weight in my portfolio in retail and that’s been vindicated so far this year. It looks as if the story is very much on track.”
Most economists were heartened by the overall GDP data, but others pointed to additional factors that may hamper a supportable economic recovery.
“Headlines are nice, but if you look at the content carefully, there are weak spots,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, pointing to a disappointing increase in business investment as a possible sign of future problems.
Japan’s growth reports had little effect on other Asian shares with MSCI’s broadest index of Asia-Pacific shares outside Japan slipping about 0.1 percent.
