[Ferro-Alloys.com]

 

Japan's economy managed to avoid a recession in last year's final quarter, supported by increased spending on facilities and equipment by the country's private-sector firms.

 

Seasonally adjusted gross domestic product (GDP) grew at an annualised 0.4pc for October-December compared with the previous quarter, according to a second preliminary data release by the cabinet office on 11 March. The figure was revised up from a 0.4pc fall during the period, announced in February, resulting in a rebound from a 3.2pc contraction posted for July-September.

 

The upwards revision reflected firm investment by private-sector companies, which rose by 8.4pc on an annual basis from the previous quarter. This followed stronger capital expenditure (capex) during October-December. Japan's capex rose by 16.4pc from a year earlier to ¥14.4 trillion ($98bn) in the fourth quarter, mainly driven by manufacturing industries related to information and communications and transport equipment, according to data released by the ministry of finance on 4 March.

 

The solid capex suggests Japanese demand for energy and material resources could increase in the industrial sector, including manufacturing and non-manufacturing segments. This could also follow the government's drive for a digital and green transformation to achieve its net zero emissions goal by 2050.

 

The potential expansion of data centres and semiconductor fabrication plants is forecast to boost Japan's peak power demand by 5.37GW in the April 2033-March 2034 fiscal year, according to a document released by the trade and industry ministry on 27 February. This may support demand for thermal fuels such as coal and LNG along with cleaner fuels.

 

Japan is also encouraging private-sector firms to expand their investment in cleaner projects that will contribute to achieving its net zero emissions goal, while providing subsidies to accelerate smooth energy transition. Tokyo issued around ¥1.6 trillion of green transformation bonds through its first auction held in February, based on its scheme to issue a total of ¥20 trillion over the next decade. argusmedia