TOKYO (Reuters) - Japan’s economy was expected to expand slightly faster in the third quarter than first estimated, a Reuters poll found, buoyed by strong capital spending and showing robust exports and business investment supporting the economy.
The world’s third-largest economy was expected to post revised annualised growth of 1.5 percent in July-September, up from the initial estimate of 1.4 percent, the poll of 16 economists showed.
This would translate into a quarter-on-quarter rise of 0.4 percent from the estimate of 0.3 percent.
Economists revised up their forecasts for the third quarter GDP after data by the finance ministry showed Japanese companies raised capital spending in July-September.
Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, said there was no change to the current structure in which external demand was boosting growth while private consumption remained weak.
“The trend is that the economy is on a steady recovery path,” he said.
The poll found that capital expenditure, a key component of gross domestic product, was expected to rise 0.4 percent over the quarter, stronger than the 0.2 percent increase shown in the preliminary data.
The Cabinet Office will change the way private consumption and capital spending are calculated to increase the accuracy of preliminary GDP data, which makes it difficult for economists to forecast revised GDP, which is due on Friday.
The Cabinet Office will publish the revised third-quarter GDP data at 8:50 a.m. on Friday (2350 GMT Thursday).
Economists forecast the economy will continue to expand with upbeat overseas demand boosting exports.
Capital spending is also likely to grow ahead of the 2020 Tokyo Olympic Games and on investment in labour-saving technology.
Nonetheless, a sluggish recovery in consumer spending and wages supports expectations that the Bank of Japan will continue its stimulus policy to achieve its 2 percent inflation target.
The government is set to compile an extra budget worth 2.7-2.9 trillion yen ($24-26 billion) for the fiscal year to March 2018, to boost childcare support, raise productivity at small and medium-sized companies, and to strengthen the farm sector’s competitiveness, government sources told Reuters.
Prime Minister Shinzo Abe’s top economic advisory panel wants the coming year’s budget to reflect a combination of monetary easing and “growth-oriented” fiscal policy.
Reporting by Kaori Kaneko; Editing by Eric Meijer