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Japan’s GDP growth on an annualized basis was revised down to 1.1 per cent from 1.9 per cent.
Nevertheless, the Bank of Japan’s quarterly Tankan report showed that business confidence among the country’s largest manufacturers rose from 12 to 16 on the index since September.
The index for large non-manufacturers stood at plus 20, up from plus 14 in the same period – the highest growth in six years. It gained 75 per cent in standing since June 2013 alone.
The Tankan report surveyed 10,500 Japanese firms.
The report appeared to alleviate some of the bad news coming from Asian markets where there has been much speculation that a Federal Reserve meeting in the US later this week could suggest stimulus tapering.
On Monday, Asian stocks fell for the fourth consecutive day: indices in Singapore, Taiwan, China, Australia, Hong Kong, and Japan slid between 0.1 and 0.7 per cent.
The Bank of Japan report is also likely to give a boost to Japanese Prime Minister Shinzo Abe who has urged his government to focus energies on economic recovery as new figures from the Ministry of Finance showed that the country had registered a record-setting trade deficit in the first half of the year.
During the January-June period, imports grew by 9. 2 per cent on year to 38,801.2 billion yen ($389.147 billion) while exports rose 4.2 per cent to 33,957.4 billion yen ($340.5 billion) – a trade deficit of 4.8 trillion yen ($48 billion).
Economists say some of the deficit is due to the 2011 Fukushima nuclear crisis which forced the country to turn from nuclear power to more expensive fossil-fuel alternatives; some 90 per cent of Japan’s energy supplies come from imports.
Abe has also pushed for increased stimulus packages to inject fiscal momentum into the Japanese economy, and has been a proponent of devaluing the yen, much to the chagrin of other major economies.
The Bank of Japan, which itself is to meet later this week, is considering expanding its own monetary easing policy – known as quantitative easing.
The additional central bank measures in addition to a new spending policy of $54 billion may be efforts to shore up consumer confidence in the economy ahead of an expected 37 per cent tax hike.