Market Research and Analysis

Daily News
Japan Q1 economy growth lesser than thought
Bank of Japan head office building

The photo shows the Bank of Japan head office building in Tokyo.

Japan’s economy growth was less than thought first for the first quarter of 2017, according to a revised government data on Thursday. Despite that, the data still portrayed the country’s longest expansion in over a decade.


Japan, who is the world number three economy had posted a 0.3% growth for the first quarter between January and March (or 1.0% at an annualised rate) instead of the preliminary growth estimate of 0.5%.


According to the revised data, the latest figure was less than the market expectations for an upward revision to 0.6% growth as growth in investment of private residential was revised down.


Despite the cut, the data still confirmed that Japan is in its fifth straight quarter of growth in the longest economic expansion in more than ten years.


The surprise cut in the growth rate of the Gross Domestic Product (GDP) came after both the International Monetary Fund and World Bank recently lifted their projections for Japanese expansion.


The country has been picking up at a faster rate as a result of strong exports as the global economy recovers the the demand for Japan made products increases. Besides that, investment that are linked to the 2020 Olympics in Tokyo is also giving the economy a boost.


However, both the government and Bank of Japan (BoJ) are still struggling to break away from years of on and off deflation. The consumer prices still remain way below the BoJ’s 2.0% inflation target.


Consumers will be discouraged to spend by the falling prices and they might postpone purchases until prices decrease more or instead decide to save money. Businesses are pressured by inflation and a cycle whereby firms reduced the expansion of production, hiring new workers or increasing wages is created.


The job market in Japan is tight with unemployment rate remaining at a 23 year low of 2.8%. The extremely low jobless rate has not succeeded in a significant increase of wages which is mostly due to decreasing labour force and increase in temporary work which has a lower pay.


Risk Warning:

There is a substantial risk of loss in trading commodity futures, option and off-change foreign currency products.
Read our General Risk Disclosure.