Japan’s Economic Growth Slowed in Q4 2017

Forex News

The economic growth of Japan was weaker than the forecast in the fourth quarter of 2017. The government report showed that, Japan's gross domestic product rose 0.1% in the fourth quarter of 2017, but growth was weaker than the economists' forecast of 0.2% and below the 0.6% recorded in the third quarter. In annual terms, GDP increased by only 0.5%, showing a weaker growth than the previous three months (2.2%), and less than the expected growth of 0.9%. But still, despite weaker growth, the Japanese economy continues to expand for eight consecutive quarters and this is the first such series for more than three years.

The USD/JPY pair fell to almost 107.00, level which is the weakest since November 2016, while the fall in Japanese stocks increases demand for the yen, which is often observed in times of market turmoil. Strong growth in recent quarters, a steady increase in inflation, and an increase in bond yields generally led to speculations that the Bank of Japan will soon follow other central banks in the direction of policy normalization, perhaps by increasing target profitability.

The latest data also indicate that domestic demand is gaining momentum. Private consumption increased by 0.5% in the fourth quarter compared to the previous three months. The business spending grew by 0.7% compared to the previous quarter, less than the forecast +1.1%.