Japan’s gross domestic product (GDP) grew at a slightly slower pace than initially reported in the second quarter due to a downward revision in corporate and household spending, signaling slower second-quarter consumption and impacting the central bank‘s rate-hike hopes.
The nation’s economy expanded by an annualized 2.9 percent in the second quarter compared to the previous three months, the cabinet office’s revised data recently revealed.
Growth was slower than the economists’ median forecast for 3.2 percent growth and a 3.1 percent rise in the preliminary estimates. The revised figure for Japan recorded a quarter-on-quarter expansion of 0.7 percent compared with a 0.8 percent rise last month.
The capital expenditure component of Japan’s GDP rose 0.8 percent in the second quarter, down from a 0.9 percent increase in the initial estimates. Meanwhile, private consumption, which accounts for more than half of the Japanese economy, rose 0.9 percent, down from the preliminary reading of 1 percent.
The Bank of Japan aims for consistent improvement in domestic demand as it focuses on exiting its decade-long monetary stimulus program and raising interest rates further in the coming months.
Read: ECB considers rate cuts as inflation reaches lowest levels since mid-2021, says official
While the revised second-quarter GDP data will likely impact the Bank of Japan’s decision on rate hikes, recent data on spending is raising uncertainty. Japan’s central bank raised its key interest rate to 0.25 percent from 0-0.1 percent in July. Markets are now looking for additional clues regarding the timing of the bank’s next move.
Analysts expect the Japanese economy to continue improving gradually with positive trends in wages and personal and corporate spending. However, risks remain from external factors such as a potential economic slowdown in the U.S. and China.
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