TOKYO: Japan’s economy expanded for a fourth straight quarter at the end of 2016, with recovering global demand fueling export gains that offset soft domestic consumption.
Gross domestic product (GDP) expanded 1 per cent on an annualised basis from the previous quarter in the three months through December, according to data released by the Cabinet Office on Monday (median estimate of economists +1.1 per cent).
Measured quarter on quarter, GDP rose 0.2 per cent (estimate +0.3 per cent) Private consumption was unchanged (estimate 0 per cent). Business spending rose 0.9 per cent (estimate +1.2 per cent). Net exports, or shipments less imports, added 0.2 percentage point to GDP.
Japan’s fourth-quarter growth marked the first time in more than three years that the economy expanded for four consecutive quarters. The yen’s decline following Donald Trump’s election is providing a tailwind for Japanese exporters and corporate earnings, and a moderate export-driven recovery is expected to continue. The infusion of fiscal stimulus this year will also raise growth, but modest wage increases and lacklustre consumer spending will limit the upside.
“This is really an export-driven recovery we’re talking about,” Izumi Devalier, chief economist at Merrill Lynch Japan Securities, said on Bloomberg television. “Private consumption has been pretty weak still, and unless we get private consumption fired up, it’s hard to see growth accelerating very strongly from here,” he added.
“It’s good to see consumer spending isn’t falling but it has no power to pick up and become a leading engine for the economy because of small wage growth,” said Takashi Shiono, an economist at Credit Suisse Group.
“Business investment has been solid but I don’t expect it to accelerate from here.” “I expect Japan’s economy will continue a moderate recovery for a while, helped by the global recovery,” Shiono said, adding that it relieves pressure on the Bank of Japan to undertake additional monetary stimulus.
Private inventories subtracted 0.1 percentage point from GDP in the fourth quarter. The GDP deflator fell 0.1 per cent from a year earlier.
