JA­PAN SET TO SUS­TAIN RE­COV­ERY

Q4 up­ward re­vi­sion read­ies stage for 5th straight quar­terly

New Straits Times - - Business / World -

GLOBAL tail­winds look set to sus­tain Ja­pan’s mod­est re­cov­ery this year, as ex­ports prop up an econ­omy that is still strug­gling to stoke do­mes­tic de­mand.

Yes­ter­day’s up­ward re­vi­sion of gross do­mes­tic prod­uct (GDP) in the fi­nal three months of last year sets the scene for a fifth-straight pe­riod of growth — the long­est streak since the six quar­ters of gains to mid-2006.

The econ­omy grew an an­nu­alised 1.2 per cent in the Oc­to­berDe­cem­ber pe­riod, less than the me­dian es­ti­mate for 1.6 per cent an­nu­alised growth but more than the pre­lim­i­nary read­ing of a one per cent an­nu­alised ex­pan­sion.

The fig­ure trans­lates into quar­ter-on-quar­ter growth of 0.3 per cent, ver­sus a pre­lim­i­nary read­ing of 0.2 per cent and the me­dian es­ti­mate of 0.4 per cent.

A yen that is fore­cast to re­main rel­a­tively cheap as United States in­ter­est rates rise should bol­ster Ja­pan’s com­pet­i­tive­ness, un­der­pin­ning cor­po­rate prof­its and con­tin­ued in­vest­ment in man­u­fac­tur­ing to meet over­seas con­sump­tion.

Still, there is lit­tle hard ev­i­dence to sug­gest that Ja­pan’s tight labour mar­ket will spark strong wage gains that might en­cour­age house­holds to spend more and com­pa­nies to ex­pand out­put for the do­mes­tic mar­ket.

“Ja­pan was on track for re­cov­ery, led by ex­ports and pro­duc­tion, thanks to the pick-up in the global cy­cle,” said Hiroshi Shi­raishi, a se­nior econ­o­mist at BNP Paribas.

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