Japan household spending rises as GDP revised up

Japan’s household spending rose for the first time in more than a year but on one-off factors, government data showed Tuesday, as GDP was revised up, confirming the country’s exit from recession.

Household spending in October rose 1.9 per cent year-on-year, with the increase due in part to the government’s controversial domestic tourism campaign, which has been criticised as poorly conceived given the ongoing coronavirus pandemic.

But it was also due to the weakness of spending last October, after a consumption tax hike, making this year’s figures positive by comparison, according to data compiled by the internal affairs ministry.

Meanwhile, the Cabinet Office revised up the GDP figure for the July-September period to 5.3 per cent from a preliminary estimate of 5.0 per cent, with a decline in corporate investment smaller than had been initially thought.

The figures come with the government expected to announce later Tuesday additional stimulus spending.

Japan’s economy exited recession after three-quarters of contraction, with the revised data also showing the world’s third-largest economy shrank 8.2 per cent in Q2, more than the previously estimated 7.9 per cent.

That was the worst figure for Japan since comparable data became available in 1980, exceeding even the brutal impact of the 2008 global financial crisis.

The GDP data will be welcome news for Japan’s government, which has avoided the tough lockdown measures seen in some other countries as it tries to balance preventing the spread of coronavirus with protecting the economy.

Japan was already struggling with a stagnating economy and the impact of a consumption tax hike implemented last year before the pandemic hit.

It has seen a smaller coronavirus outbreak compared to some of the worst-hit countries, with infections counting slightly more than 162,000 and deaths at around 2,330.

(Source: BSS)