Japan: recession avoided and the Yen celebrates

Positive data from Japan which avoids recording two consecutive quarters of decline in GDP and therefore officially entering into recession, and this already seems almost positive.

Japan's GDP grew 0.1% qoq in 4Q 2023, compared to flash data of a 0.1% decline and a 0.8% contraction in 3Q.

The economy narrowly avoided a recession, as markets expected a 0.3% increase, aided by a sharp upward revision in capital spending (2.0% compared to the preliminary print and the 3 quarter of a decline of 0.1%, and the market consensus of an increase of 2.5%).

Additionally, net trade contributed positively (0.2 percentage points, unchanged from the flash print), with exports (2.6% vs 0.9% in Q2) growing more than imports (1.7 % vs 1.0%). So the contribution from abroad has been positive.

Meanwhile, private consumption, which represents around 60% of the economy, shrank for the third consecutive quarter (-0.3% compared to the initial reading of a decline of 0.2% and after a decline of 0, 3% in Q3), due to high cost pressure and persistent headwinds at home.

Furthermore, public spending fell more than initially expected (-0.2% versus -0.1% in flash data, after a 0.3% increase in the third quarter), as did public investment (-0. 8% versus -0.7% in the first estimate and after a decline of 1.0% in the third quarter). The Tokyo government must start getting busy again:

This news, linked to a fall in the dollar, leads to a slight improvement in the exchange rate of the Japanese Yen against the dollar. Moreover, however, the foreign trade situation has improved, therefore the exchange rate of the Yen compared to other currencies can also improve

At least the Yen moved away from 150, which indicated extreme weakness of the Japanese currency. In the end, however, the Bank of Japan's relaxed monetary policy is not causing excessive damage to the economy, on the contrary it has provided a stimulus that would otherwise have been missing and would have made Japan a little too similar to the EU.

---

---

The article Japan: recession avoided and the Yen celebrates comes from Economic Scenarios .

---

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/giappone-evitata-la-recessione-e-lo-yen-festeggia/ on Mon, 11 Mar 2024 09:30:12 +0000.