TOKYO (REUTERS) - The Japanese economy grew faster than initially estimated in the fourth quarter as capital expenditure staged a quick recovery from a series of natural disasters in the previous quarter.
However, despite the upward revision to growth, economists are likely to temper their optimism on the outlook given a recent batch of disappointing data on exports and factory output and the economy expected to weaken due to the US-China trade war.
Japan's gross domestic product rose at an annualised rate of 1.9 per cent in October-December, more than the initial estimate of a 1.4 per cent annualised expansion and more than the median estimate for a 1.8 per cent annualised increase, revised data from the Cabinet Office showed on Friday (March 8).
That followed a revised 2.4 per cent annualised contraction in the third quarter, which was the biggest decline in more than four years.
Economists warn that capital expenditure and overall economic growth are likely to weaken in the first half of this year as exports dwindle and inventories pile up due to a slowdown in global trade.
The revised figure translates into a quarter-on-quarter expansion of 0.5 per cent in real, price-adjusted terms. This is more than a preliminary reading of a 0.3 per cent expansion and economists' median estimate of a 0.4 per cent increase.
The capital expenditure component of GDP rose 2.7 per cent in October-December from the previous quarter to mark the fastest expansion since January-March 2015. That compares with the median forecast for a 2.8 per cent increase and a preliminary 2.4 per cent expansion.
Private consumption, which accounts for roughly 60 per cent of GDP, rose 0.4 per cent in the fourth quarter, less than the preliminary estimate of a 0.6 per cent increase.
Net exports - or exports minus imports - contributed minus 0.3 percentage point, unchanged from preliminary data.
Domestic demand added a revised 0.8 percentage point to GDP, more than a preliminary reading of a 0.6 percentage point contribution.
Separate data on Friday showed household spending rose 2.0 per cent year-on-year in January, more than the median estimate for a 0.4 per cent annual contraction, which may ease concerns about domestic demand.
Real wages in January rose 1.1 per cent year-on-year in January, matching the same pace of growth in the previous month, the labour ministry said on Friday.
The United States last year imposed tariffs on US$250 billion worth of goods imported from China, with Beijing hitting back with duties on US$110 billion worth of American products, including soybeans and other commodities.
US President Donald Trump has delayed tariffs on US$200 billion worth of Chinese imports as negotiations to resolve the eight-month trade war show signs of progress.
Even if the two sides resolve their differences, the damage to global trade and Japan's economy may take some time to repair with uncertainty about trade policies hurting sentiment and disrupting manufacturers' supply chains.