Japanese companies' capital expenditures in Q4 have increased significantly, and the Japanese economy is expected to avoid a technical recession.

Economists say that the Japanese economy may ultimately avoid a technical recession by the end of 2023, as the latest capital expenditure data suggests that the GDP for the fourth quarter of 2023 is likely to be revised upwards. Data released on February 15 showed that the initial seasonally adjusted real GDP for the fourth quarter of 2023 in Japan was -0.1%, with market expectations at 0.3% and the previous value at -0.7%. This marks two consecutive quarters of negative growth, meeting the definition of a technical recession. However, the significant increase in corporate spending in the fourth quarter has led some economists to expect that the revised GDP for the fourth quarter will show positive growth. The revised seasonally adjusted real GDP for the fourth quarter is scheduled to be announced on March 11, incorporating the capital expenditure data released on Monday. The data shows that the annual rate of increase in corporate capital expenditure in the fourth quarter was 16.4%, far exceeding market expectations of 2.7% and the previous value of 3.4%. This data has boosted speculation that the Bank of Japan may end its negative interest rate policy as early as the March 19 policy meeting. Overnight index swaps indicate a 50% likelihood that the Bank of Japan will end the negative interest rate policy at the March meeting, up from 31% the previous week. Additionally, most economists predict that the Bank of Japan will implement its first rate hike since 2007 before April. Yoshimasa Maruyama, Chief Market Economist at SMBC Nikko Securities, stated in a report on Monday, "We are likely to see positive results in the revised data. Despite weak consumer spending, the expansion of capital investment to make up for labor shortages is clearly a positive factor for the economic outlook."