Japan's economy grew at a slower-than-expected pace in the fourth quarter (Q4) of 2024, according to data released on Monday by the Cabinet Office. This has led to a decline in the value of the Japanese Yen (JPY) against the US dollar (USD).
- Quarterly Growth (QoQ): GDP expanded by 0.1%, below the 0.3% forecast and -0.1% recorded in the previous quarter.
- Annualized Growth: The economy grew by an annualized rate of 0.4%, missing the 1.1% estimate and 0.4% decline in the prior period.
- USD/JPY Impact: The USD/JPY currency pair dropped by 0.20% after the announcement, trading at 146.46.
The Cabinet Office attributed the weaker-than-anticipated growth to a decline in private consumption, which accounts for over half of Japan's GDP. This was partially offset by increased public spending and a strong performance in the manufacturing sector.
Significance of GDP Data
GDP is a key indicator of economic health, measuring the total value of goods and services produced within a country. A high GDP reading often indicates a strong economy, while a low reading can signal economic weakness.
Impact on the Financial Markets
The release of GDP data can significantly impact financial markets, particularly currency exchange rates. A strong GDP reading can boost the value of a country's currency, while a weak reading can lead to a decline. In this case, the lower-than-expected GDP growth has led to a depreciation of the JPY against the USD.
Historical Context
Japan's economy has faced challenges in recent years, with a prolonged period of low growth and deflation. The country has implemented various monetary and fiscal policies to stimulate economic activity, but progress has been slow.
Outlook
The outlook for Japan's economy remains uncertain. While the government has taken steps to address structural issues, the path to sustained growth is unclear. External factors, such as global economic conditions and trade disputes, could also impact Japan's economic performance.
Japan's Q4 GDP growth fell short of expectations, reflecting ongoing economic challenges. This has led to a decline in the value of the JPY against the USD. The outlook for Japan's economy remains uncertain, but the government remains committed to implementing measures to support growth.
Additional Information
Table: Japan's GDP Growth Rates
| Period | QoQ (%) | Annualized (%) |
|---|---|---|
| Q4 2024 | 0.1 | 0.4 |
| Q3 2024 | -0.1 | -0.4 |
| Q4 2023 | 0.4 | 1.6 |
List: Key Factors Affecting Japan's GDP
- Private consumption
- Public spending
- Exports and imports
- Manufacturing activity
- Investment
Subheading: About Japan's Gross Domestic Product (GDP)
Japan's GDP is calculated by the Cabinet Office and measures the total value of goods and services produced in the country over a given period. The GDP is a comprehensive indicator of economic activity and is used by policymakers, businesses, and investors to assess the health of the Japanese economy.