Japan’s economy grew faster in the last quarter of 2017 than initially estimated, according to a revised estimate. The world’s third-largest economy has now expanded for eight straight quarters. This marks the longest run of growth in 28 years, since a 12-quarter expansion ended in 1989, a period which coincided with Japan’s economic bubble.
The economy of Japan primarily grew on solid global demand for technological products that created an investment boom in Japan’s auto, semiconductors and machinery sectors.
Meanwhile, analysts believe that it’s quite unlikely that the Bank of Japan (BoJ) will consider doing away with its monetary stimulus measures, as low wage growth is preventing people from spending more and hindering an acceleration in inflation. Moreover, economists believe that Japan is on track for stable growth and remain positive about the longer-term outlook. Given this scenario, this is a good time to invest in Japan’s stocks.
Japan’s GDP Increases for Eight Consecutive Quarters
Japan’s economy grew at an annualized 1.6% in the fourth quarter compared with the preliminary estimate of 0.5% and came in above economists’ expectations of 0.9%. The growth was primarily driven an upward revision in key business areas. This also reflects a 0.4% quarter-over-quarter increase, up from the initial reading of 0.1% and above of the 0.3% pace registered in the third quarter.
The upward revision was primarily due to faster-than-expected gains in capital expenditure, driven by robust investment in technology, and information and communications like smartphones and production machinery such as robots and labor-saving technology.
Capital expenditure increased 0.7%, marking the fifth straight quarter of growth. Another key factor that contributed to upward GDP revision was a buildup in private inventory, caused by rising stock of crude oil and natural gas, steel products, electronics parts and devices.