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Japan’s economy posted growth for the eighth straight quarter, the longest continuous expansion since a 12-quarter stretch in the late 1980s.
The economy expanded at a 0.5-percent annualized rate in October-December, less than the median estimate for annualized growth of 0.9 percent, Cabinet Office data showed on Wednesday. That followed a revised 2.2-percent annualized increase in July-September.
The long run of growth is also an encouraging sign for the Bank of Japan, hinting that the economy may at last be building up momentum to lift consumer prices toward its 2-percent inflation target.
Nonetheless, the lack of any inflation effect in the data and a decline in real wages for the quarter highlight the challenges still facing the BOJ’s efforts to foster a virtuous cycle of growth, consumer spending and business investment－a key element of Prime Minister Shinzo Abe’s “Abenomics” policy.
Japan’s economy has now posted the longest continuous expansion since a 12-quarter stretch of growth between April-June 1986 and January-March 1989 around the height of Japan’s notorious economic bubble.
“The headline figures are somewhat weaker than expected, but that’s not something to worry too much about,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“Capital expenditure and consumption are picking up. Exports are also strong. Other recent data are also strong. It’s safe to say the economy is in pretty good shape.”
Compared to the previous quarter, gross domestic product (GDP) grew by 0.1 percent, slightly less than the median estimate of 0.2-percent growth and following a 0.6-percent quarter-on-quarter expansion in July-September, Cabinet Office data showed on Wednesday.
Despite the weaker-than-expected headline figures, many economists say they expect growth to continue because companies can use their strong profits for capital expenditure.
The tightest labor market in about 40 years is also expected to finally give unions more bargaining power in wage negotiations.
(REUTERS)
