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Avoiding Recession's Grip: Japan's Economic Resilience Ahead of Bank of Japan Meeting

Avoiding Recession\'s Grip: Japan\'s Economic Resilience Ahead of Bank of Japan Meeting_e0444387_16585967.jpg

Japan deftly sidestepped the precipice of a technicalrecession in the latter half of 2023, as the nation's economic data underwent apivotal upward revision. This unexpected turn of events has provided apersuasive case for the central bank to consider abandoning its longstandingnegative interest rate policy, either in the forthcoming meeting or thesubsequent one.

The revised figures unveiled a surprising narrative – Japan'sgross domestic product (GDP) expanded at an annualized rate of 0.4% during theOctober-December quarter, defying initial estimates of a 0.4% contraction. Thisreversal effectively negated the preliminary 0.1% decline, which had followed a0.8% dip in the third quarter, confounding economists' forecasts of a 1.1%uptick.

Analyzed through the lens of quarter-on-quarter growth,Japan's GDP demonstrated a 0.1% expansion, a stark contrast to the initial 0.1%drop and exceeding median projections of a 0.3% rise.

The revised data painted a picture of economic resilience,with companies' investment in plants and equipment proving stronger thananticipated. Capital expenditure surged by 2.0% on a quarterly basis,surpassing the preliminary 0.1% decrease but falling short of the median marketforecast of a 2.5% increase.

This unexpected economic buoyancy has fueled growing marketspeculation that the Bank of Japan could potentially abandon its negativeinterest rate policy as early as this month. This conjecture has been furtherbolstered by recent hawkish remarks from board members, indicating that Japanis steadily progressing towards the central bank's coveted 2% inflation target.

As the Bank of Japan convenes for its two-day policy-settingmeeting on March 18-19, the nation's economic fortitude, coupled with theallure of policy normalization, promises to catalyze a pivotal discourse on thefuture trajectory of monetary policy.


by insanganteng | 2024-03-12 16:59 | NEWS | Comments(0)

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