Signs of Life In Japanese Economy
Japan’s economic engine may not be roaring, but there is a definite hum. The economy grew for a fifth consecutive quarter at the start of 2017, the longest stretch of growth in more than a decade. Prime Minister Shinzo Abe’s government has been trying for four and a half years to coax the economy into a higher gear. Although Japan’s output is still the world’s third-largest, after the United States and China, consistent growth has been elusive. Japanese gross domestic product increased by 2.2 percent in annualized terms in the three months through March, the government said on Thursday. The economy has now been expanding for a longer period than at any time since 2005-6. The pace also accelerated from the previous quarter, and was stronger than economists had expected. Exports have been lifting output since the start of the expansion, and they did so again last quarter. A broadly recovering global economy is helping, as is a weaker yen, which makes Japanese goods more affordable abroad. The domestic side of the economy has been shakier, with spending by consumers and businesses mostly weak and inconsistent. But in the latest quarter, consumption and business investment both rose. But a crucial ingredient is missing: inflation. The big idea behind “Abenomics,” as Mr. Abe’s strategy is known, was to engineer a rise in consumer prices, which would lift corporate profits and workers’ pay. That, the government said, would make the economy grow faster and more consistently. Prices have barely budged, however, leaving many economists speculating that the current streak will fade.