Not only is Japan not in recession, it was growing strongly in the third quarter of 2015, as the country’s gross domestic product data cemented its reputation for unreliability.
Growth for the third quarter was revised on Tuesday from an annualised fall of 0.8 per cent to an annualised rise of 1 per cent, erasing the technical “recession” declared just three weeks ago.
The revision was far greater than analysts’ forecasts of a 0.1 per cent rise. It changes the whole picture of the Japanese economy towards healthy growth — assuming the revised figure is accurate.
Investment was the main force behind the revisions: it was amended from a quarter-on-quarter fall of 1.3 per cent to a rise of 0.6 per cent. That meant that instead of subtracting 0.7 percentage point from annualised growth, it added 0.3 percentage point.
Companies also whittled down inventories less than previously thought. Whereas in the first estimate inventories knocked 2.1 percentage points off annualised growth, that was revised down to 0.8 percentage point.
The first estimate of Japan’s GDP, which relies on partial survey data, is notoriously unreliable and prone to large revisions. A 1.8 percentage point shift from expansion to contraction is rare, however.
Japan’s government is pushing companies to increase investment at home and raise wages in order to boost demand, stimulate the economy and escape deflation.
