Original title: Japan's actual GDP in the fourth quarter was weaker than expected, and the yen hit a nine-month low!
Japan's real GDP was weaker than expected in the fourth quarter, and the yen fell for a fifth consecutive day in early trading to a nine-month low, as investors sold safe-haven assets to a stronger dollar, data showed on Tuesday morning. In addition, the slow vaccination process is now a major drag on the yen.
Japan's GDP growth rate in the fourth quarter was revised downwards as companies cut spending to cope with falling demand.
Japan's economic expansion from October to December 2020 was slower than originally estimated. Companies tightened spending on factories and equipment and sharply reduced inventories as the COVID-19 pandemic hit demand.
The slowdown was mainly due to a larger contraction in private inventories in the fourth quarter than previously estimated, while the expansion in capital expenditure was smaller than estimated, even though exports remained robust.
Separate data showed that household spending fell more year-on-year in January than the previous month, suggesting that the COVID-19 epidemic has led consumers to continue to be cautious about spending.
Figures released by the Cabinet Office on Tuesday showed that Japan's economy grew for the second consecutive quarter from October to December.
The year-on-month growth rate was 11.7%, which was weaker than the initial value of 12.7%.
The increase was also below the 12.8 per cent median forecast by economic analysts. The economy expanded 2.8% from October to December compared with the previous quarter, with an initial expansion of 3.0%.
Capital expenditure rose 4.3 per cent from the previous quarter, less than the initial 4.5 per cent, but better than the median forecast of 4.1 per cent.
Private inventories, including raw materials and manufactured goods, had a negative impact on revised gross domestic product (GDP) growth by 0.6 percentage points, with an initial value of 0.4 percentage points lower.
Yigui, an economic analyst at the first Life Economics Research Institute, said: "although Japan has been vaccinated, it will take some time to produce results, so the economy is expected to experience some ups and downs." We expect the economy to accelerate from the second quarter, but it will be difficult to make up for the losses in the first quarter soon. "
Private consumption, which accounts for more than half of gross domestic product (GDP), rose 2.2 per cent from the previous quarter, the same as the initial value.
The contribution of net exports to the revised GDP growth is positive 1.1 percentage points, while the contribution of domestic demand is positive 1.8 percentage points, which is lower than the initial contribution of positive 2.0 percentage points.
The weaker-than-expected GDP correction came after data showed a rise in Japanese exports and industrial production in January, suggesting a stronger recovery in global demand after a sharp decline in last year's epidemic.
But official figures released on Tuesday showed that Japanese household spending fell 6.1 per cent in January from a year earlier, below analysts' expectations of a 2.1 per cent drop.
Some analysts worry that the downturn in business investment and household spending could last longer than expected, heralding weak demand and potentially depriving Japan of domestic growth momentum.
The Bank of Japan will meet next week to review policy tools to improve their "effectiveness and sustainability". The epidemic made the BoJ's aggressive stimulus program last longer than originally expected.
The yen hit a nine-month low as investors sold safe-haven assets to buy dollars
With the release of real GDP growth in the fourth quarter, the USDJPY rose above the 109th mark and the yen fell to a nine-month low, underperforming all other Gmur10 currencies. The dollar rose 0.25% against the yen to 109.16, while the Bloomberg dollar spot index climbed for the fifth day in a row, the longest straight gain in nearly a year. The Swiss franc fell 0.1 per cent as investors evacuated safe-haven assets, traders said.
An Asian currency trader said the Australian and New Zealand dollars stopped at recent lows and existing exporters bought into the selling of trend funds and some leveraged funds.
Western Pacific Ocean"the defensive and negative-yielding Swiss franc and yen have almost no advantage in this environment, and if anything, they are attractive financing currencies," said Richard Franulovich, head of foreign exchange strategy at the bank in Sydney.
Japanese people's hesitation about vaccine
In Japan, the success of vaccination is seen as the key to the country's success in hosting the Olympic Games as planned. Delayed vaccination has always been a problem, and Japan has one of the lowest levels of trust in vaccines in the world.
It is so important to gain public trust in vaccination that Japan has actually delayed the approval of vaccines such as Pfizer Inc.
The United States and the United Kingdom immediately approved the use of the drug in early December after the company reported the results of three phases of the trial. But Japan insisted on additional tests and did not begin vaccination until February 17.
Murakaka, a researcher at Kyoto University School of Medicine, said that Japan has not been hit by the epidemic like many other countries, which means that people really do not realize the "significance" of vaccination, but she thinks people's views have improved.
As more and more countries begin mass vaccination, perceptions may have changed significantly in the last three weeks of February.
The slowness of the vaccination process is now a major drag on the yen.
At 11:37 Beijing time, the dollar is now trading at 109.17 yen.