Japan's GDP grew 1.6% in 2017

This was driven by strong domestic demand.

Bank of America Merrill Lynch (BofAML) reported that Japan’s preliminary estimates of GDP grew by 1.6% in 2017, which is below BofAML’s previous forecast of 1.8%.

Exports rose by 6.8% YoY in 2017, which were boosted by high shipments to China and Asian countries in Q4, specifically of semiconductor-related equipments, whilst imports increased by 3.6%, which were driven by an increase in crude oil and mobile phone-related products.

“Both exports and imports increased sharply in Oct-Dec. Exports increased by +10.0% QoQ SAAR in Oct-Dec, up from +8.7% in Jul-Sep, but imports pick-up at an even faster pace, rising +12.0% in Oct-Dec from a -4.8% contraction in Jul-Sep. Accordingly, the net exports contribution to headline annualized GDP dropped sharply, to -0.1ppt, from +2.2ppt in Jul-Sep. On a positive note, we think this result reflects strong domestic demand,” BofAML added.

Private consumption rose 1.1% YoY, which was driven by durable goods and services spending, as well as an improvement in the durable goods replacement cycle and income environment.

Further, business investment increased by 2.8% in the last quarter, which contributed to 0.4ppt for the GDP growth for the whole year.