Japan’s capital expenditure surged remarkably by of 16.4% yoy in Q4, significantly outperforming expectations of 2.9% yoy increase. This marked the eleventh consecutive quarter of business investment growth, highlighting the robust confidence among Japanese corporations in the country’s economic prospects.
The impressive figures come as a beacon of optimism, especially considering they will contribute to the revision of Q4’s GDP data, which initially indicated unexpected contraction of -0.4% qoq. With this revision, it’s anticipated that Japan may have narrowly avoided slipping into a technical recession.
The investment growth was particularly pronounced among manufacturers, who increased their spending by 20.6% yoy. This 11th consecutive quarter of expansion was predominantly driven by the information and communication machinery and transport equipment sectors.
Non-manufacturers also contributed with 14.2% yoy increase in investment, marking the sixth consecutive quarter of growth. The telecommunication, transportation, and postal service sectors were notably instrumental in this rise.
A Finance Ministry official commented on the data, stating, “The results reflect our view that the economy is recovering moderately. But we will need to monitor the impact of slowing overseas economies and inflation on corporate activity.”
