Japan's economy showcased impressive growth in the fourth quarter, with its Gross Domestic Product (GDP) expanding by 0.7% quarter-on-quarter. This growth surpassed the anticipated 0.3% rise predicted by economists polled by Reuters. Released on Monday, the data revealed a robust annualized GDP growth of 2.8%, significantly exceeding the Reuters estimate of 1%.
Compared to the previous quarter's revised GDP growth of 0.4%, the fourth quarter's performance demonstrated a marked improvement over the 0.6% rise seen in the third quarter. Year-on-year, Japan's economy expanded by 1.2% in the fourth quarter, further underscoring the nation's economic resilience.
Following the data release, Japan's Nikkei 225 index experienced a slight decline, falling by 0.29%. Meanwhile, the yen strengthened, rising 0.2% to trade at 152.02 against the dollar, reflecting increased investor confidence.
The GDP data arrived amidst a backdrop of monetary policy shifts, as Japan's central bank raised interest rates to 0.5%, their highest level since October 2008. This rate hike provided the bank with more latitude to continue its monetary tightening strategy, aligning with broader economic objectives.
Contributing to this economic uptick, Japan's household spending in December rose by 2.7% year-on-year in real terms, marking the first increase since July 2024. This rise in spending indicated a recovering domestic demand, which played a pivotal role in bolstering the nation's economic performance.