Japan's economy expanded in the October-December quarter at a slower pace than initially reported, weighed by weaker consumption but still likely supporting the case for further interest rate hikes.

At the same time, government officials and analysts expressed concern about risks from US President Donald Trump's tariff policies and soft consumption affected by higher prices.

Gross domestic product (GDP) expanded an annualised 2.2% in the three months to December, the Cabinet Office's revised data showed on Tuesday, slower than the 2.8% growth in the initial estimate and economists' median forecast.

The revised GDP numbers translate into a quarter-on-quarter expansion of 0.6% in price-adjusted terms, compared with 0.7% growth issued in February. The softness in consumption was also seen in much weaker-than-expected household spending data released on Tuesday.

"There wasn't any significant change, so I don't think it will have any impact on changing people's perceptions of the economy," said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute.

"If you look at GDP on its own, I don't think it will prevent the Bank of Japan (BOJ) from raising interest rates."

The BOJ raised short-term interest rates in January to their highest in 17 years, and growth momentum in the world's fourth-largest economy will be among key factors determining how fast it continues to tighten policy.

The capital expenditure component of GDP, a barometer of private demand-led strength, rose 0.6% in the fourth quarter, revised up from a 0.5% expansion in the initial estimate. Economists had estimated a 0.3% rise.

Private consumption, which accounts for more than half of economic activity, was unchanged versus the preliminary reading of 0.1% uptick.

External demand, or exports minus imports, contributed 0.7 of a percentage point to growth, unchanged from the preliminary reading. Domestic demand shaved 0.2 of a percentage point off.

Japan's economy minister Ryosei Akazawa warned of a hit to consumption from sustained food cost increases and downside risks from overseas, including US trade policy.

"The uncertainties (from Trump's policies) have heightened from December or January," said Uichiro Nozaki, an economist at Nomura Securities.

A barrage of new Trump policies has increased uncertainty for businesses, consumers and investors, notably back-and-forth tariff moves against major trading partners like Canada, Mexico and China.

If tariffs are deployed, that would have an impact on the economy, which would have repercussions on financial markets and monetary policy, Nozaki said, adding that "we need to wait and see" how the BOJ views those factors.

Separate data from the internal affairs ministry showed household spending rose 0.8% in January year-on-year, well below the market estimate for a 3.6% jump in a Reuters poll.

On a seasonally adjusted, month-on-month basis, spending dropped 4.5%, bigger than an estimated 1.9% decline.

Source: Theedgemarkets

Korea's top envoy for international investment cooperation has called for the enhancement of bilateral industrial cooperation with the United States in advanced industries during his ongoing visit to Washington, Seoul's industry ministry said Tuesday.

Choi Joong-kyung, ambassador for international investment cooperation, made the call during a seminar on industrial cooperation between Korea and the U.S. with the Heritage Foundation, a major think tank based in Washington, according to the Ministry of Trade, Industry and Energy.

Choi has been on a trip to the U.S. since Feb. 28 to seek ways to bolster bilateral cooperation in various industries amid rising concerns over the Donald Trump administration's push for a new tariff scheme.

In the seminar, Choi called for advancing bilateral cooperation in six major sectors — shipbuilding, defense, artificial intelligence (AI), nuclear power plants, energy and batteries.

The two countries will be able to strengthen their competitiveness in the global market if they can integrate the U.S.' cutting-edge technologies and Korea's manufacturing infrastructure, Choi said, according to the ministry.

He also stressed the need for consistency in U.S. policies, such as the CHIPS Act and the Inflation Reduction Act, to create an environment for continued investment by Korean firms in the U.S.

The ministry said Choi plans to visit five other major U.S. think tanks and institutions, including the U.S. Chamber of Commerce and Peterson Institute for International Economics, this week as part of efforts to bolster bilateral industrial cooperation. 

Source: Koreatimes

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Japan's trade minister on Monday said he asked the United States not to impose trade tariffs on his country, but did not win any assurance that Japan would be exempt, including from a 25% steel and aluminium duty set to start on Wednesday.

"We agreed to continue close consultations with the US government and to hold discussions at the working level as soon as possible," Yoji Muto said in Washington DC, after meetings with Secretary of Commerce Howard Lutnick, US Trade Representative Jamieson Greer, and White House economic adviser Kevin Hassett.

In a bid to persuade US President Donald Trump to exempt Japan from tariffs on cars and other products, Muto and other senior Japanese officials are touting Japan as a close economic partner that has invested heavily in the US economy and created millions of jobs.

The new 25% tariff rates on steel and aluminium imports into the United States are set take effect on March 12, according to the executive orders signed by Trump last month.

In talks with his US counterparts, Muto said they also discussed Japan buying more US liquefied natural gas (LNG), a gas pipeline project in Alaska, and Nippon Steel's bid to buy US Steel.

Source: Theedgemarkets