Ja­panese growth beats an­a­lyst fore­casts

The Myanmar Times - - International Business -

JA­PAN’S econ­omy ex­panded more than ex­pected in the third quar­ter as ex­ports off­set slack con­sumer spend­ing, govern­ment data showed yes­ter­day, of­fer­ing rare good news for the coun­try’s strug­gling growth project.

The world’s third-largest econ­omy ex­panded 0.5 per­cent on-quar­ter be­tween July and Septem­ber, and 2.2pc on an an­nu­alised ba­sis, the Cabi­net Of­fice said.

Ja­pan’s econ­omy con­tracted in the last three months of 2015, be­fore bounc­ing back be­tween Jan­uary and March with a 0.5pc rise quar­teron-quar­ter and a 0.2pc ex­pan­sion be­tween April and June.

The wob­bly trend has put Ja­panese of­fi­cials un­der pres­sure to de­liver as econ­o­mists in­creas­ingly write off Prime Min­is­ter Shinzo Abe’s at­tempts to ce­ment a last­ing re­cov­ery.

His spend-for-growth pol­icy, dubbed Abe­nomics, boosted stock prices and pushed down the yen, help­ing Ja­panese ex­ports.

But the yen, of­ten bought as a safe haven in times of un­cer­tainty, had been on the up­swing since the start of the year, and got a big bump after Bri­tain’s shock vote to exit the EU.

It has re­cently weak­ened against the dol­lar after bil­lion­aire busi­ness­man Don­ald Trump’s elec­tion as US pres­i­dent, of­fer­ing up some good news for Mr Abe’s ad­min­is­tra­tion.

Yes­ter­day, the yen was around four-month lows against the green­back, bright­en­ing the out­look for ex­porters in the com­ing months.

The dol­lar was at 107.61 yen, its high­est mark since July.

“Third-quar­ter [growth] was a pos­i­tive sur­prise, it should be a re­lief for Ja­panese pol­i­cy­mak­ers,” said Ko­hei Iwa­hara, an econ­o­mist at Natixis Ja­pan Se­cu­ri­ties.

“How­ever ex­ports are mak­ing all the growth, mainly due to a pick-up in the eu­ro­zone, so it could a one-off wind­fall. I would ex­pect a slow­down in the fourth [quar­ter].”

There are con­cerns about the im­pact of Mr Trump’s pres­i­dency, in­clud­ing the pos­si­ble de­rail­ing of a trade pact that is pil­lar of Mr Abe’s plans to re­vive growth.

Mr Trump has ex­pressed strong op­po­si­tion to the Trans-Pa­cific Part­ner­ship (TPP), a 12-na­tion agree­ment span­ning some 40pc of the global econ­omy.

The US and Ja­pan are the two big­gest mem­bers, but the trade deal be­came a hot-but­ton is­sue dur­ing the US elec­tion cam­paign, with crit­ics in­clud­ing Mr Trump say­ing it would cost Amer­i­can jobs.

It has been signed but is yet to be rat­i­fied by law­mak­ers in the US, while Ja­pan’s lower house of par­lia­ment passed it last week.

Yes­ter­day, Mr Abe re­peated his sup­port for the trade pact and vowed that “it’s not over at all”.

“It is im­por­tant to show our coun­try’s will at a time when pro­tec­tion­ism is about to spread,” he said.

Mr Abe came to of­fice in late 2012 and launched a growth plan – a mix of mas­sive mon­e­tary eas­ing, govern­ment spend­ing and red-tape slash­ing.

But prom­ises to cut through red tape have been slow, and the plan to buoy Ja­pan’s once-boom­ing econ­omy has looked in­creas­ingly un­re­al­is­tic.

This month, Ja­pan’s cen­tral bank again pushed back the time­line for hit­ting its in­fla­tion tar­get, the lat­est pol­icy change that has raised ques­tions about Abe­nomics.

The Bank of Ja­pan has for more than three years em­barked on a bond-buy­ing stim­u­lus pro­gram to try to keep in­ter­est rates ul­tra-low and in­crease bor­row­ing and spend­ing.

But the bank said it now ex­pects to hit 2pc in­fla­tion by March 2019 – four years later than its orig­i­nal tar­get. –

Photo: AFP

Pedes­tri­ans stand in front of an elec­tronic board dis­play­ing the Nikkei key in­dex of the Tokyo Stock Ex­change yes­ter­day.

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