Japan's Weak Q4 GDP May Lead to Further Fiscal Easing, Says Analyst

Japan's economic growth in the fourth quarter was sluggish, potentially prompting further fiscal easing, according to Marcel Thieliant, Head of Asia-Pacific at Capital Economics. According to Jin10, Thieliant noted that preliminary data for Japan's fourth quarter showed only a slight increase of 0.2% in business investment quarter-on-quarter, with net exports remaining flat and public demand decreasing by 0.2%. This suggests that the large supplementary budget passed in late November has yet to boost public spending in the previous quarter. Thieliant added that the weak economic activity increases the likelihood that Prime Minister Sanae Takaichi will not only push for a suspension of the food consumption tax but also formulate a supplementary budget in the first half of the fiscal year starting in April, rather than waiting until the end of 2026.