Capex of Japanese Companies Rose 5.5% in July-September

Capital spending by Japanese companies between July and September increased 5.5 percent over the same period last year, the Japanese government said today.

Capital investment by non-financial companies archipelago in plant and equipment totaled 9.43 trillion yen (63.821 million euros /79.356 million). The data, a component with a significant weight in the gross domestic product (GDP) Japan, will positively affect the review of macroeconomic figures of Japan for the July-September quarter that the Government intends to publish on 8 December.

During this period, Japan’s economy shrank 0.4 percent from April to June, as shown by the data presented last November 17, marking the country’s entry into technical recession.

In addition to the lingering effect of the VAT hike last April on consumption, the main engine of the economy, the Executive noted the decline in corporate capital investment, which showed a decline of 0.2 percent in these preliminary data, as one of the main factors behind the retreat. After the bad data of Japanese GDP Japanese Prime Minister Shinzo Abe said postponed until April 2017 a second increase in VAT that was scheduled for October next year and called early elections.

Knowing that his Liberal Democratic Party (LDP) is favorite in the polls, the prime minister and his cabinet see the elections as a formality to legitimize through the ballot box delaying the tax increase until 2017 and the completion of your project economic reform, dubbed “Abenomics”. The “Abenomics” seeks to bring to Japan two decades of economic lethargy with a recipe that combines a strong increase in public investment, aggressive monetary stimulus and structural reforms.