Japan's economy has shown a revised expansion at an annualized rate of 1.2% in the third quarter of 2024, up from an initial estimate of 0.9%. This upward revision was primarily driven by stronger capital investment and exports, which positively contributed to the overall growth figures. However, private consumption increased by only 0.7%, which was below the expected 0.9%. Despite these mixed signals, the Bank of Japan (BOJ) is maintaining its expectations for a potential interest rate hike, with its next policy meeting scheduled for December 18-19, 2024. Analysts are anticipating a possible increase from the current rate of 0.25%, particularly if inflation stabilizes around the BOJ's target of 2%, as indicated by BOJ Governor Kazuo Ueda. Takeshi Minami from Norinchukin Research Institute expressed concerns regarding the weak consumption trends, which could hinder future growth. Additionally, Nomura Securities economist Uichiro Nozaki noted that the growth rate is lower than the previous quarter's 2.2%, highlighting ongoing uncertainties due to global challenges and potential policy changes in the U.S. under a new Trump administration. The external demand has also negatively impacted the economic outlook, raising questions about Japan's export performance amid these global economic uncertainties.
In a positive development, Japan's exports rose by 3.8% in November 2024, driven by strong demand for chip-making machinery and non-ferrous metals, exceeding the consensus estimate of 2.5%. This increase comes despite a decline in shipments to the U.S. by 8% and to Europe by 12.5%. Conversely, exports to China increased by 4.1%. The yen averaged 152.83 per dollar in November, 1.7% weaker than the previous year, which aided exporters by inflating overseas earnings. Imports fell by 3.8%, primarily due to a decrease in crude oil prices, resulting in a negative trade balance of ¥117.6 billion. The quarterly survey conducted by Japan's central bank, known as the tankan, indicates a slight improvement in business sentiment among manufacturers, particularly in heavy industries such as automaking, fossil fuels, and machinery. The sentiment index for large manufacturers rose to 14 from 13 in September, suggesting a cautious optimism that may influence the BOJ's decision on interest rates in the upcoming meeting. This survey reflects a broader context of Japan's economic growth, which was supported by consumer spending, despite the challenges faced in other sectors. [4375922][c37d3d3b][9c340918][0fc88580][15b8c977][2ace6555][7d3cfa66][f599aa55][6a1f02c5]