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Thursday, 1st March 2012
In Business In Japan,

Japan could raise GDP estimate as capital spending gains

The Japanese government could raise its gross domestic product (GDP) forecast after figures showed it had probably overestimated how much the economy contracted in the fourth quarter of 2011.

A surge in capital spending in the country has also helped boost optimism in the country.

According to forecasts surveyed by Bloomberg, GDP shrank by 0.7 per cent in the final quarter of 2011, significantly less than a preliminary report which suggested a contraction of 2.3 per cent.

Meanwhile, a report from the Finance Ministry today (March 1st) showed that capital spending has risen 4.9 per cent compared to 12 months ago.

This, combined with the weakening of the yen and growth in industrial output and consumer spending, as well as increased reconstruction investment by the government, may all help the Japanese economy begin to grow again in the current quarter.

"The upward trend in business investment is likely to continue as companies become more optimistic as rebuilding demand materialises more and the yen weakens," Akiyoshi Takumori, the chief economist at Sumitomo Mitsui Asset Management Co told the news provider.

The Nikkei 225 share index closed today down 0.16 per cent at 9,707.37.

Written by Kimberley Homer