Japan's third-quarter capital expenditure (capex) rose by 2.9%, indicating a strong and resilient domestic demand despite the global economic challenges. This follows a 7.6% capex growth in the second quarter, showcasing the country's economic resilience. The data, which will be used to calculate the revised GDP figures, suggests that the economy is weathering the impact of U.S. tariffs and other external pressures. However, preliminary data revealed a 1.8% annualized GDP contraction in the July-September period, primarily due to a drop in exports. Capital spending in this quarter compared favorably to the previous three months, with a 1.4% decline on a seasonally adjusted basis. Despite this, corporate sales rose by 0.5% year-over-year, and recurring profit increased by 19.7%. The robust capital expenditure is attributed to the strong appetite for investment in information technology, which aims to address the labor crunch caused by Japan's fast-aging population. Analysts predict that this strength in capital expenditure will support the economy, especially as inflation pressures private consumption and exports continue to face U.S. tariffs. The government's efforts to stimulate investment through targeted public spending in key sectors are also expected to contribute to economic security. A recent stimulus package of 21.3 trillion yen ($136 billion) is the largest since the COVID-19 pandemic, further bolstering Japan's economic resilience.
