Japan's fourth-quarter Q4 growth seen quickening on shopping spree before tax hike

Thu Feb 13, 2014 3:35am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Stanley White

TOKYO (Reuters) - Japan's economic growth is expected to have quickened at the end of last year as consumers ramped up spending ahead of a planned sales tax hike, but analysts say that Tokyo may have to inject fresh stimulus to brighten the outlook.

Lukewarm exports and wages growth have undercut some of the economic gains of the past year, and recent turmoil in emerging markets have also raised worries that Japanese shipments may fail to pick up the pace.

The median from a Reuters poll of 26 economists forecast Japan's economy to have grown 0.7 percent in the October-December quarter from the previous three months.

That would be faster than a 0.3 percent expansion June-September and mark the fifth consecutive quarter of growth. The median translates into an annualized increase of 2.8 percent. The Cabinet Office will release the data on Monday.

"What's driving growth is rush demand before the tax hike and capex gains," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

"The rebound in consumption after the tax hike could be subdued as wage growth remains fairly subdued. The government may have to pursue some form of stimulus."

The Reuters survey found that Japan's economy picked up momentum in October-December as consumers rushed to buy cars, houses and durable goods to avoid paying more after an increase in the sales tax scheduled for April.

Encouragingly, capital expenditure is also expected to have risen at the fastest pace in two years as companies divert some of their rising profits to investment on assembly lines and equipment.   Continued...

Mannequins wearing cashmere clothes are displayed at Fast Retailing's Uniqlo casual clothing store in Tokyo October 4, 2013. REUTERS/Issei Kato