Japan's Economy: A Gradual Return to Growth

Japan's economy managed to eke out an annualised 0.2% expansion in the October-December quarter, as government data revealed on Monday. This marginal growth signifies a cautious resurgence fueled by a reversal in corporate investments, providing the Bank of Japan with a reason to maintain its progressive interest rate hikes as part of normalising monetary policy.

Following a significant electoral victory, Prime Minister Sanae Takaichi's administration has set its sights on bolstering economic resilience through strategic investments in critical sectors. Although this GDP growth fell short of the projected Reuters poll estimate of 1.6%, it marked progress from the significant 2.6% decline seen in the previous quarter.

With a mere 0.1% increase in the quarterly reading, below the forecasted 0.4% rise, economists predict that Japan's economy, the world's fourth largest, will maintain gradual growth. A survey from the Japan Center for Economic Research projects a continued upward trajectory, with anticipated annualised growth of 1.04% in the first quarter and 1.12% in the second.