JAPAN SET TO SUSTAIN RECOVERY

Q4 upward revision readies stage for 5th straight quarterly

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.