Japan's economy grew in third quarter, avoiding recession

Japan’s gross domestic product expanded in the third quarter rather than contracting as previously thought, meaning the economy didn’t enter a recession earlier this year. GDP rose an annualized 1% in the three months ended Sept. 30, compared with a preliminary figure that had indicated a 0.8% drop, data from the Cabinet Office showed Tuesday. Economists, who changed their forecasts after surprisingly strong capital expenditure numbers last week, expected an increase of 0.2%. The revision is good news for Prime Minister Shinzo Abe, who has made reviving the economy a priority for his administration, although growth continues to lag behind record corporate profits and rising share prices. The government is still expected to compile an extra fiscal spending package this month after the Bank of Japan in 2015 refrained from adding to its record monetary stimulus program. “The economy will probably have a steady recovery this quarter, driven by a pick-up in exports and production,” Hiroaki Muto, chief economist at Tokai Tokyo Research Center Co. in Tokyo, said before the report was released. “Domestic consumption also is looking better and employment and income conditions are recovering.” After the economy shrank 0.7% in the April-June period, a second straight quarter of contraction in the three months through September would have seen Japan meet the common definition of a recession. Underscoring his optimism amid mixed signals from economic data, central bank Governor Haruhiko Kuroda said as far back as September that it wouldn’t be unusual for the economy to expand in the third quarter. Data from the finance ministry last week foreshadowed the chance of a GDP upgrade, with capital spending jumping more than 11% in the three months ended Sept. 30 from a year earlier. A year ago, strong capex numbers raised hopes for a turnaround but on that occasion the recession proved to be deeper than initially expected. Governor Kuroda and his policy board meet week to consider any changes to their monetary program. Just one of 41 economists surveyed by Bloomberg expect a move then by the BOJ. Abe last month ordered the compilation of an extra budget for the current fiscal year. The package, which Abe adviser Etsuro Honda has said should be as much as 3.5 trillion yen ($28.4 billion), is likely to provide financial aid to low-income pensioners. Separately Tuesday, Japan’s current account surplus for October widened to 1.46 trillion yen compared with forecasts for 1.59 trillion yen. By Keiko Ujikane/Bloomberg