TOKYO (Reuters) – Japan’s economy expanded more than initially expected in the final quarter of 2021, but rising input prices likely kept wholesale inflation near a record in February in a sign of rising risks to the fragile recovery, a Reuters poll showed.
Revised gross domestic product (GDP) data will likely show the world’s third-largest economy increased at an annualised 5.6% in October to December of last year, slightly higher than a preliminary reading of 5.4% growth, according to the poll of 17 economists.
The poll showed the upgrade is largely because of an expected 0.7% increase in capital expenditures, larger than the preliminary 0.4% rise, reflecting the robust fourth-quarter business spending data in a Ministry of Finance survey this week.
Yet the strong growth figure does not suggest Japan’s full recovery from the blows of the COVID-19 pandemic, according to analysts.
“Even after the upward revision, the size of GDP will remain below that of pre-pandemic levels in October-December 2019,” said Shinichiro Kobayashi, principal economist at Mitsubishi UFJ Research and Consulting.
With COVID curbs hammering consumption and the Ukraine crisis clouding the outlook, many analysts expect Japan’s economic growth to slow or even contract in the current quarter.
The immediate hit from the war in Ukraine will likely come through a spike in fuel and commodity prices, analysts say.
Wholesale prices likely rose 8.7% in February from a year earlier, the poll showed, hovering near a record reached in November on gains in raw material and energy costs.
Separate data will show household spending likely rose 3.6% in January from a year earlier, marking the first increase in six months, the poll showed.
The government will release the revised fourth-quarter GDP data at 8:50 a.m. on March 9 (2350 GMT, March 8) and household spending data at 8:30 a.m. on March 11 (2330 GMT, March 10).
The Bank of Japan will release the wholesale inflation data at 8:50 a.m. on March 10 (2350 GMT, March 9).
(Reporting by Kantaro Komiya; Editing by Christian Schmollinger)