Date
26 March 2017
Pedestrians cross the street in Tokyo's Ginza shopping district. Private consumption showed no growth in the last quarter. Photo: Reuters
Pedestrians cross the street in Tokyo's Ginza shopping district. Private consumption showed no growth in the last quarter. Photo: Reuters

Exports boost Japan economy in fourth quarter

Japan’s economy grew for a fourth straight quarter in the final three months of 2016 on the back of strong exports.

However, weak private consumption and rising protectionism in the United States suggested a sustainable recovery could be some way off, Reuters reports.

Cabinet Office data on Monday showed the world’s third-largest economy grew an annualized 1.0 percent in September-December, roughly in line with the 1.1 percent increase markets had expected, following a revised 1.4 percent expansion in July-September.

The data should be a relief to government and Bank of Japan policymakers who aim to sustain growth and pull the economy out of deflation and stagnation.

However, uncertainty over US President Donald Trump’s policies has cast a cloud over the export-reliant economy as domestic demand remains underpowered, analysts say.

Trump’s protectionist policies, which have rattled global markets and regional economies reliant on the vast US market, have kept investors guessing about the outlook for world trade, investment and growth.

Economy Minister Nobuteru Ishihara said Japan remained in a moderate recovery trend and expected the positive momentum to be maintained.

“However, attention should be paid to uncertainty over global economy and fluctuations in financial markets,” he told reporters after the GDP data release.

Analysts were equally cautious about the outlook even as a weak yen has provided exports a lift.

The preliminary reading for fourth-quarter gross domestic product (GDP) figure translated into 0.2 percent growth on a quarter-on-quarter basis, versus a 0.3 percent gain expected by analysts.

External demand – or exports minus imports – contributed 0.2 percentage point to GDP, due to a rise in shipments from a pick-up in car demand from China and the US, and electronics parts from Asia.

Private consumption, which accounts for roughly 60 percent of GDP, showed no growth, largely in line with a flat reading forecast by economists.

Rising prices of fresh food and vegetables are likely to have dented households’ purchasing power.

Underlining a struggle to accelerate inflation to the BOJ’s 2 percent target, the GDP deflator, a broad gauge of prices, fell 0.1 percent in October-December from the same period a year earlier, down for a second straight quarter of declines.

Housing investment, a bright spot in the economy thanks to the central bank’s aggressive monetary easing, rose 0.2 percent, the slowest expansion in four quarters.

On the upside, capital expenditure – a key component of GDP – rose 0.9 percent, reversing from a 0.3 percent decline in the third quarter.

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CG

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