Capex helps Japan dodge technical recession; pressure on BOJ eases a little

By FXStreet FXStreet (Mumbai) – Japan’s initial estimate of a contraction in the third quarter was revised to an annualized expansion of 1.0 percent. The upgrade was possible all thanks to an increase in capital expenditure. With the GDP revised upward, Japan has manged to avoid technical recession for now.

The initial GDP data for the July-September quarter had shown the economy contracting (0.8 percent) for the second straight quarter and had dimmed policy maker’s hope of pulling the economy out of stagnation and putting it back on the recovery track.

Today’s data suggests the economy has actually performed better than what earlier data had indicated. The figure released today exceeded the median market forecast for 0.1 percent growth.

Upward revision supported by increase in capex

PM Shinzo Abe had stepped up pressures on companies to invest more of their record profits to initiate the economy’s recovery process.The upward revision has been facilitated by capital expenditure which was revised up the 1.3 percent fall estimated earlier.It seems companies are implementing their plans to step up capital expenditure.

However,analysts have warned against getting hopes too high.The upgrade was also aided by a slower-than-expected fall in inventory,signifying that weak demand is making it extremely difficult for companies …read more

Source:: FX Street