Japan’s economy expanded more than expected in the third quarter as exports offset slack consumer spending, government data showed yesterday, offering up some rare good news for the nation’s struggling growth project.
The world’s third-largest economy expanded 0.5 percent sequentially between July and September, and 2.2 from a year earlier, the Cabinet Office said.
That easily exceeded market expectations of a quarterly growth rate of 0.2 percent, or an annualized growth rate of 0.8 percent.
Photo: AFP
Japan’s economy contracted in the final three months of last year, before bouncing back in January to March with a 0.5 percent increase quarter-on-quarter and 0.2 percent expansion in April to June.
The wobbly trend has put Japanese officials under pressure to deliver as economists increasingly write off Japanese 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.
However, 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 US dollar after Donald Trump’s election as US president, offering up some good news for Abe’s administration.
Yesterday, the yen was at a four-month low against the US dollar, brightening the outlook for exporters in the coming months.
It closed 0.9 percent lower at ￥107.65 in Tokyo trading.
“Third-quarter [growth] was a positive surprise; it should be a relief for Japanese policymakers,” Natixis Japan Securities economist Kohei Iwahara said.
“However, exports are making all the growth, mainly due to a pickup in the eurozone, so it could a one-off windfall. I would expect a slowdown in the fourth [quarter,” Iwahara said.
There are concerns about the impact of Trump’s presidency, including the possible derailing of a trade pact that is a pillar of Abe’s plans to revive growth.
Trump has expressed strong opposition to the Trans-Pacific Partnership (TPP), a 12-nation agreement spanning about 40 percent 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 Trump — saying that it would cost US jobs.
The agreement 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.
Abe yesterday 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 told parliament.
Abe came to office in late 2012 and launched a growth plan — a mix of massive monetary easing, government spending and red-tape slashing.
However, promises to cut through red tape have been slow and Abe’s plan to buoy Japan’s once-booming economy have looked increasingly unrealistic.
His spend-for-growth policies have set Japan apart from some of its rich nation counterparts, including Germany, which has been reluctant to endorse them, seeing it as an ineffective way to stimulate the economy.
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