Further GDP growth for Japan as Abenomics bears fruit
JAPAN’S economy accelerated in the second quarter, growing by 1pc in the three-month period in one of its longest spells of growth in recent years.
Strong consumer spending combined with increased capital investment to produce the healthy result, adding to the wider trend of economic recovery across the globe as a whole.
The world’s third-largest economy has struggled to achieve sustainable strong growth for much of the past two decades. It has now racked up six con- secutive quarters of economic expansion – the longest period of unbroken growth for more than a decade – raising hopes that the so-called Abenomics programme, named after Prime Minister Shinzo Abe, could be bearing fruit.
That programme includes printing money, aiming to cut real interest rates and weaken the yen, though that did not have the anticipated effect of boosting imports in the latest quarter.
Surveys of business activity indicate growth has continued into July, so economists expect more positive numbers in the months ahead.
Kiichi Murashima, an economist at Citi, believes that sustained growth across several sectors will propel the economy forwards. “We believe businesses are gradually turning more positive about capital spending as corporate profits improve,” he said.
“Consumer spending, business investment and residential investment look likely to increase.”
But economist Joanna Davies at Fathom Consulting fears the current upbeat picture is “nothing more than a sugar high”.
“Japan’s economy remains weighed down by debt and the policy response to that debt,” she said.