Japan fourth-quarter GDP revised up as capex rises at fastest in almost three years

By Stanley White

TOKYO (Reuters) - Japan's gross domestic product growth was revised up in the fourth quarter as capital expenditure grew at the fastest pace in almost three years, welcome news for policymakers as they begin to discuss how to wind down years of massive stimulus.

The economy grew an annualised 1.2 percent in October-December, less than the median estimate for 1.6 percent annualised growth but more than the preliminary reading of a 1.0 percent annualised expansion.

The figure translates into quarter-on-quarter growth of 0.3 percent, versus a preliminary reading of 0.2 percent growth and the median estimate for 0.4 percent growth.

A stronger pace of growth will be a boon to the government as policymakers have been counting on an increase in business investment to drive future expansion and increase low productivity.

However, growth is still not robust enough to generate sustained inflation, and the risk of rising protectionism could discourage Japanese exporters from raising wages, seen as key to boosting consumption and economic activity at home.

The capital expenditure component of GDP rose 2.0 percent from the previous quarter, which was more than the forecast for 1.7 percent growth.

The revised data showed capital expenditure grew at the fastest since a 2.3 percent quarterly rise in January-March 2014.

Private consumption registered no growth in October-December, the same as preliminary data.

Some economists expect capital expenditure to increase further as companies will soon have to start investing in more efficient equipment to deal with a shrinking pool of workers as the population ages.

However, U.S. economic policy poses a risk, because companies could suddenly turn cautious on capex if U.S. President Donald Trump adopts protectionist trade policies.

(Editing by Jacqueline Wong)