Japan economy grows 2.8 % in 4th quarter

Japan's economy grew at an annualized rate of 2.8 % in price-adjusted real terms in October-December after seasonal adjustment, expanding for the third straight quarter thanks to robust capital spending and foreign demand, the Cabinet Office said in a preliminary report on Monday.

For the whole of 2024, the country's gross domestic product rose 0.1 % from the previous year, the fourth consecutive annual growth.

In nominal terms, GDP grew 2.9 % to 609,288.7 billion yen, exceeding 600 trillion yen for the first time on a full-year basis.

In the fourth quarter, private consumption, a pillar of domestic demand, rose 0.1 % from the previous quarter in real terms, growing for the third successive quarter.

But the pace of growth slowed from the July-September period as consumption of beverages, rice and vegetables declined apparently due to higher prices. Corporate capital spending expanded by 0.5 %, led by bullish investment in software and semiconductor manufacturing devices.Housing investment rose 0.1 %, while public investment declined 0.3 % on soaring labour materials costs.

Exports rose 1.1 %, driven by growing patent sales and higher spending by visitors to Japan. Imports fell 2.1 %, their first drop in three quarters, due mainly to decreases in medicines and electronic parts.

Domestic demand made a negative contribution of 0.1 percentage point to the quarter-to-quarter GDP growth rate of 0.7 %, while external demand made a positive contribution of 0.7 points.

Takeshi Minami of Norinchukin Research Institute Co. said that private consumption growth slowed while falling imports made the biggest contribution to the country's economic growth.

The data underscore "weakness in domestic demand" and the economy is "not in a good shape," he said.

[Copyright The Jiji Press, Ltd.]

(2025/02/17-00:00)