Japan’s Q4 GDP growth better-than-expected at 0.5%

Japan’s economy performed better-than-expected for the fourth quarter, as it expanded by 0.5% on a quarter-on-quarter basis, higher than the earlier prediction of a 0.3% gain.

The growth in the last quarter of 2018 is a rebound from the 2.6% contraction in the third quarter, which was a period affected by natural disasters that temporarily stalled production in factories.

On a year-on-year basis, Japan’s gross domestic product (GDP) gained 1.9%, higher than the preliminary figures of a 1.4% gain reported earlier last month.

Firm employment figures, higher household spending

Experts are optimistic that the better-than-expected results reflect a rebound from the effects of the natural disasters in the middle of last year.

The country is likely to see some firming up in growth for the first quarter of this year, as unemployment for last year improved to the lowest level in 26 years. The month of December saw unemployment rate easing by 0.1 percentage point from a month earlier to 2.4%.

In January, Japan’s household spending edged up 2.0%, against market expectations for a 0.5% fall, data from the internal affairs ministry revealed. The start of a new year led to a rise in spending on housing, education, and vehicle and telecommunication-related fees.

Trade pressures persist

Global trade and growth uncertainties continue to affect the trade-oriented nation and is expected to create some headwinds this year.

Exports in Japan fell the most in more than two years in January, following a sharp fall in orders for the country’s machinery goods and a weakened sentiment from businesses on their business outlook.

The export results follow weak overseas machinery orders which fell the most in more than a decade in December. This is as trade friction between China and the United States is causing the global supply chain demand to stutter.