Japan has managed to avoid a technical recession following the revision of its official GDP growth estimates

The revised data shows gross domestic product (GDP) was 0.4% higher in the last three months of 2023 compared to a year earlier.

Provisional figures released last month indicated the second consecutive quarter of economic contraction.

Two quarters in a row of an economy shrinking is typically considered the definition of a technical recession.

But the revised figures still came below expectations, as some economists had forecast an upward revision to fourth quarter GDP of around 1%.

Hopes that the country had skirted a recession were boosted last week when figures from the Ministry of Finance showed a sharp rise in the amount companies invested in their businesses.

However, the figures from Japan’s Cabinet Office on Monday showed private consumption, which makes up about 60% of the economy, fell by 0.3% for the period.

Japan’s uneven economic performance may see another contraction in the current quarter due to the impact of issues including a slowdown of neighbouring China’s economy and a suspension of production at car maker Daihatsu.

The upward revision to the fourth quarter GDP came as expectations are growing that the country’s central bank could soon raise interest rates.

The Bank of Japan has held rates at -0.1% since it cut borrowing costs below zero in 2016 as it tried to boost spending and investment.

Negative rates make the yen less attractive to global investors, which has pushed down the currency’s value.

Japan’s main stock market index, the Nikkei 225, was around 2.5% lower on Monday morning.