TOKYO (Reuters) - Japan’s economy just grew by $278 billion - about the size of South Africa’s entire gross domestic product - thanks to an accounting change (and some better data).
This massive burst of statistical growth came about via the government’s adoption of a new base year and incorporation of international accounting standards, such as adding research and development spending to capital expenditure figures.
Prime Minister Shinzo Abe vowed last September to raise nominal GDP by nearly a quarter to 600 trillion yen by 2020 to show voters he was focusing on reviving the economy ahead of an upper house election in July 2016.
Revised data out on Thursday showed nominal gross domestic product reached 532.2 trillion yen ($4.7 trillion) in the fiscal year ending in March 2016 - getting remarkably close to Abe’s goal of 600 trillion yen.
The size of the economy had rebounded to its levels before the collapse of Lehman Brothers in 2008 and was just shy of a record hit in fiscal 1997, the Cabinet Office data showed.
Stronger-than-expected private consumption as well as Japan’s first use of United Nations’ System of National Accounts boosted the GDP calculation.
Most of the upward revision came from using detailed data on private consumption, which was not available when preliminary figures were released.
The data offers some relief for policymakers struggling to reflate a stagnant economy with dwindling policy options.
It also underscores the view held by some Bank of Japan and private economists that private consumption may be stronger than monthly government data suggests.
Private consumption rose 0.5 percent in fiscal 2015, revised up from a preliminary 0.1 percent decline.
Some policymakers complain that household spending data, used to calculate preliminary GDP, is distorted due to its small sample size and underestimates the strength of consumption.
Still, many analysts say the revision does not change the challenges Japan faces in sustainably emerging from deflation.
“Achieving (Abe‘s) target merely because of adjustments to the statistical methodology rather than through genuine economic growth is meaningless,” said Marcel Thieliant, senior Japan economist at Capital Economics.
The BOJ began releasing its own private consumption index that takes into account supply-side data, such as retailers’ sales. That index showed household spending rise for a second straight month in October.
The Cabinet Office said on Thursday Japan’s economy grew at a 1.3 percent annualized rate in July-September 2016, a stark revision from the 2.2 percent annualized growth first estimated and barely over half the median estimate for a 2.4 percent annualized expansion.
($1 = 113.4900 yen)
Reporting by Leika Kihara; Editing by Eric Meijer