Ja­pan posts long­est growth streak since bub­ble econ­omy

Iran Daily - - Tse & Global Economy -

Ja­pan’s econ­omy grew for the eighth straight quar­ter at the end of 2017, gov­ern­ment data showed on Wed­nes­day, its long­est pe­riod of ex­pan­sion since the ‘bub­ble’ boom days of the late 1980s.

Gross do­mes­tic prod­uct fig­ures fell short of ex­pec­ta­tions and rep­re­sented a slow­down from the pre­vi­ous quar­ter, but an­a­lysts fore­cast con­tin­ued growth nonethe­less, AFP wrote.

GDP ex­panded just 0.1 per­cent in the last quar­ter of 2017, the Cab­i­net Of­fice said, a far cry from the 0.6 per­cent fig­ure for July-septem­ber.

“The growth rate for the last quar­ter was very low com­pared with the bub­ble pe­riod but the econ­omy is solid enough,” said Takeshi Mi­nami, chief econ­o­mist at Nor­inchukin Re­search In­sti­tute.

“The slow­down was due pri­mar­ily to in­ven­tory ad­just­ments and a de­cline in the con­tri­bu­tion of net ex­ports due to strength in im­ports,” added an­a­lysts at Bar­clays in a re­port.

“As such, it did not im­ply a pull-back in the mo­men­tum of eco­nomic re­cov­ery,” an­a­lysts Tet­su­fumi Ya­makawa, Yuichiro Na­gai and Yuk­ito Fu­nakubo wrote.

At an an­nu­al­ized rate, the world’s third­largest econ­omy grew 0.5 per­cent, also miss­ing ex­pec­ta­tions.

“There are lin­ger­ing wor­ries over con­sump­tion but we can ex­pect the econ­omy to pick up fur­ther if ‘shunto’ wage hikes are bet­ter than the pre­vi­ous years,” said Mi­nami, re­fer­ring to col­lec­tive wage ne­go­ti­a­tions be­tween la­bor and man­age­ment held ev­ery spring.

“The cur­rent ex­pan­sion could be ex­tended fur­ther,” he said.

For the cal­en­dar year 2017, the econ­omy grew 1.6 per­cent, against 0.9 per­cent in 2016.

Ja­pan’s Min­is­ter for Econ­omy, Trade and In­dus­try Toshim­itsu Motegi said the cur­rent ex­pan­sion was solid com­pared with the more volatile ‘bub­ble’ boom in the 1980s, ac­cord­ing to Bloomberg News.

Spec­u­la­tive in­vest­ment in land and stocks on low in­ter­est rates, pushed the Nikkei stock in­dex to al­most 40,000 in 1989 — nearly dou­ble its cur­rent level.

But the bub­ble burst at the start of the 1990s, ush­er­ing in a pe­riod of low or no growth known as the ‘lost decades’.

The cur­rent pe­riod of growth is good news for Prime Min­is­ter Shinzo Abe, who has been try­ing to fire up the econ­omy with his pro-spend­ing pol­icy dubbed Abe­nomics since he took of­fice in late 2012.

Junko Nish­ioka, chief econ­o­mist at Su­mit­omo Mit­sui Bank­ing Corp., also said an uptick in in­come sug­gested the Ja­panese econ­omy would ex­pand fur­ther.

Abe­nomics is pro­vid­ing “a wide range of tax mea­sures quite ben­e­fi­cial to Ja­panese firms”, she said, with the cur­rent ex­pan­sion phase less re­liant on ex­ports.

“Com­pared to the bub­ble econ­omy, the Ja­panese cor­po­rate sec­tor is very cau­tious in its in­vest­ment, in other words the signs of a bub­ble are con­tained com­pared to 30 years ago,” Nish­ioka added.

Bank of Ja­pan Gover­nor Haruhiko Kuroda, who looks set to stay at the helm un­til 2023, has vowed to main­tain a loose mon­e­tary pol­icy given still weak in­fla­tion.

The Ja­panese econ­omy has en­joyed a pe­riod of largely ex­port-driven growth, helped by a re­cov­er­ing global econ­omy.


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