Japan revises third quarter out of recession
So it appears Japan isn’t experiencing its second recession under the Abenomics economic regime. Definitely not, because that would be embarassing.
Revised figures showed that Japan’s gross domestic product, grew 1.0% in the third quarter., up from the second quarter on a seasonally adjusted annualized basis, the Cabinet Office said Tuesday.
The previous report from the office reported that the economy had shrunk 0.8% from the second to third quarter.
The second quarter’s number was a revised decline of 0.5%. When Japan first reported third-quarter results, the negative growth placed the country in its second recession, defined as two consecutive quarters of contraction, in as many years.
Forgive Asia Unhedged if we seem s bit skeptical. But a two-percentage-point move revision is pretty big and not very common, especially not in the exact opposite direction.
And Japan has everything to gain from the new number. The revision now allows Prime Minister Shinzo Abe to say his plan for the economy, called Abenomics, is on track and moving the country to a recovery, instead of having his highly -touted economic plan for ending Japan’s economic malaise declared a failure.
It appears capital spending was stronger than expected in the third quarter. Way stronger. Instead of shrinking 5% in the third quarter on an annualzed basis, as the initial estimate said, it actually grew 2.3%. That means the revision was 7.3 percentage points in a positive direction.
Is this believable?
Already Japanese machinery makers have reported falling demand from smartphone makers. In addition, with an economic slowdown in China, there’s no reason for Japanese business being so rosy.
Yet even as the economy moves in a positive direction, next week Abe is expected to release details of additional economic stimulus in the current fiscal year, which ends March 2016. Officials have said the stimulus could be worth between ¥3 trillion and ¥3.5 trillion ($24 billion to $28 billion), or about 0.6% of GDP, reported the Wall Street Journal.