Japan's economy grew a better-than-expected 1.7 percent in the quarter from October through December, the best showing in more than a decade, with strong exports and corporate investments driving the growth.
The Cabinet Office figures released yesterday for Japan's GDP, the value of the nation's goods and services, were the highest since the 2.5 percent growth in the April-June 1990 period. The October-December 2003 growth would amount to an annual rate of 7 percent if it kept up for three more quarters.
The Japanese economy has now grown for four straight quarters, after stumbling for more than a decade. Growth was 0.6 percent in January-March, 0.8 percent in April-June and 0.6 percent in July-September. It had contracted 0.1 percent in October-December 2002.
Economists surveyed by Dow Jones Newswires and Nikkei News had expected the economy to have risen 1.2 percent in the latest quarter.
"The growth was quite a surprise," said Junichi Makino, senior economist at Daiwa Institute of Research in Tokyo, adding that growth was propelled by a blossoming digital gadget market both at home and abroad. "What's happening can be called an IT recovery."
In the decade following the burst of the "bubble economy," Japan slipped in and out of recession with periods of moderate recovery. But recent signs show the worst may be over, riding on exports to the US, China and the rest of Asia.
Companies here are reporting better profits and investing more in new plants and machinery, the Cabinet Office said, although consumer spending has been dragged down by deflation, the spiraling down of prices that has continued for five years.
Although yesterday's data show that deflation continues to grip the economy, there was good news on other fronts.
Exports for the quarter ended Dec. 31 grew 4.2 percent, while private sector investment surged 5.1 percent. Private consumption edged up 0.8 percent, as people snatched up liquid-crystal display TVs, game machines, video equipment and other home appliances, Yoshihiko Senoo of the Cabinet Office told reporters.
The economy grew a healthy 2.7 percent last year, marking a turnaround from the 0.4 percent contraction in 2002.
The Japanese government is forecasting GDP growth of 2 percent for the fiscal year ending March 31. Given the recent robust figures, the economy can even shrink 3.4 percent in January through March to achieve that goal.
Economy and Banking Minister Heizo Takenaka welcomed the news as surpassing expectations.
"The economy is recovering gradually but steadily based on private demand," he said.