Key events
Shares fell in Tokyo as investors digest today’s weaker-than-expected growth report.
The Nikkei 225 index dipped by 0.24%, while the broader Topix shed 0.8%.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said:
“I figured the GDP figures would be treated as past figures, but seeing the Nikkei average struggling to gain, there may be some slight impact.”
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Japan has escaped falling into recession, just, with a weak return to growth that highlights the need for punchy measures from its new government to spur the economy on.
Japanese GDP expanded by just 0.1% in October-December, fresh data from Japan’s Cabinet Office shows, missing forecasts of 0.4% growth.
That follows a contraction of 0.7% in July-September, and means Japan has avoided a technical recession – two negative quarters of growth in a row.
Private consumption drove the expansion, while exports and public spending were weak.
Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research and Consulting, explained:
“Personal consumption showed resilience, but whether this resilience can be sustained will depend on whether price relief measures will make an impact and whether real wages will turn positive.”
Japan’s economy has been hurt by Donald Trump’s trade war, which increased tariffs on Japanese goods entering the US.
The diplomatic row between Beijing and Tokyo over the security of Taiwan also weighed on the economy, with Chinese tourism to Japan almost halving.
The data comes just a week after prime minister Sanae Takaichi won a landslide election victory, having promised “responsible and proactive fiscal policies”.
Takaichi was due to meet with Bank of Japan governor Kazuo Ueda, in their first bilateral meeting since the election.
Last November, Takaichi unveiled a massive ¥21.3tn (£100bn) stimulus package in an effort to spur economic growth and protect households from the rising cost of living. Further measures may be needed….