Japan's GDP Surprise: Will a Rate Hike Follow?

Japan's economy grew faster than initially reported due to improved capital investment and exports. Despite upbeat figures, weak consumption highlights recovery fragility, leading to uncertainty over a potential December interest rate hike by the central bank.

Revised data shows Japan's economy expanded more than expected in the July-September period, mainly due to better capital investment and exports. This fuels speculation of an interest rate hike by the central bank. However, weak private consumption casts doubt on its sustainability.

The improved figures support potential rate hikes, as Gross Domestic Product (GDP) increased by an annualized 1.2%, surpassing initial estimates of 0.9% growth. Despite these gains, the Bank of Japan (BOJ) remains cautious, with some experts not expecting a December hike.

Key data, such as revised capital expenditure and external demand, will influence the BOJ's December policy meeting. While third-quarter GDP growth lagged, the focus shifts to labor wage enhancements and stable domestic demand to sustain economic recovery amidst global uncertainties.

(With inputs from agencies.)