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MNI: Govt Official Warns Of Weaker Spending Amid High Prices

(MNI) Tokyo
(MNI) TOKYO

Japan’s economy rebounded in the fourth quarter from a contraction in the third quarter due to stronger private consumption, but the government must pay attention to downward pressure from high prices on spending in the first quarter, a senior official at the Cabinet Office said on Tuesday.

“The number of infections increased and private consumption is being affected by high prices, but consumption is in a rising trend in the wake of solid spending on goods and services,” the official told reporters.

The official, however, added the government must watch the impact of weak real income on spending as high prices are a headwind for private consumption.

The Q4 GDP rose 0.2% q/q, or an annualized +0.6% following a revised -0.3% q/q, or an annualized revised -1.0% for the third quarter of 2022.

The Q4 growth was weaker than the MNI median forecast that pointed to a rise of 0.5% q/q, or an annualized +1.9%.

Private consumption, which accounts for about 60% of Japan's GDP, rose 0.5% q/q in Q4, after a revised 0.0% in Q3. The median forecast was for a 0.4% q/q rise.

Business investment fell 0.5% q/q in Q4, the first drop in three quarters following an unrevised +1.5% in Q3. The median forecast was for a 0.1% rise.

The official said capital investment tends to fluctuate on a quarterly basis and capex fell in the fourth quarter after strong capex in the second and third quarters.

He added the government must keep a close eye on whether capex will be pressured by slowing overseas economies in or after the first quarter.

The official said economic growth in the fourth quarter was mainly led by private consumption, but economic growth in 2022 was slower than the U.S. and Europe as Japan's economic recovery lagged behind those economies.

MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com
MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com

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