Wednesday, April, 25, 2018
  • Nation
  • World
  • States
  • Cities
  • Business
  • Sport
    • IPL
    • Commonwealth Games 2018
  • Entertainment
  • Galleries
  • Videos
  • Life Style
  • Specials
  • Opinions
  • All Sections  
    States Tamil Nadu Kerala Karnataka Andhra Pradesh Telangana Odisha
    Cities Chennai DelhiBengaluru Hyderabad Kochi Thiruvananthapuram
    Nation World Business Sport Cricket Football Tennis Other Education
    Entertainment English Hindi Kannada Malayalam Tamil Telugu Review Galleries Videos
    Auto Life style Tech Health Travel Food Books Spirituality
    Opinions Editorials Ask Prabhu Columns Prabhu Chawla T J S George S Gurumurthy Ravi Shankar Shankkar Aiyar Shampa Dhar-Kamath Karamatullah K Ghori
    Today's Paper Edex Indulge Event Xpress Magazine The Sunday Standard E-paper
Home World

Japan's economy posts longest expansion in a decade

By AFP  |   Published: 18th May 2017 10:04 AM  |  

Last Updated: 18th May 2017 10:04 AM  |   A+A A-   |  

0

Share Via Email

Japan's Prime Minister Shinzo Abe (REUTERS)

TOKYO: Japan has posted its longest economic expansion in over a decade, government data showed Thursday, marking a win for Tokyo's growth bid even though its battle to conquer deflation is still far from won.

The world's number three economy grew 0.5 percent in the first quarter -- or an annualised 2.2 percent. 

That was the fifth straight rise and up from a 0.3 percent expansion in the last quarter of 2016.

Japan's prospects have been improving on the back of strong exports, with investments linked to the Tokyo 2020 Olympics also giving the economy a shot in the arm. The labour market is tight and business confidence is strong with firms investing more.

But consumer spending remains tepid and efforts to lift inflation have fallen flat despite years of aggressive monetary easing by Japan's central bank. 

Private consumption picked up a modest 0.4 percent in the first quarter from zero growth in the previous three months. Individual spending accounts for more than a half of Japan's GDP.

"I can't give the 'all clear' yet," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

"Public works spending is helping prop up growth this year but it's tough to imagine that private spending is going to be a driving force for the economy."

 

- Longest in a decade -

 

The latest reading nonetheless means Japan's economy has had its longest string of gains since 2006, during the tenure of popular former prime minister Junichiro Koizumi.

The figures are good news for the current prime minister Shinzo Abe -- whose brief and underwhelming first term as Japan's premier came directly after Koizumi.

A string of short-term leaders followed before Abe swept back to power in late 2012 on a pledge to reignite Japan's once-booming economy with a plan dubbed Abenomics.

The scheme -- a mix of huge monetary easing, government spending and reforms to the economy -- stoked a stock market rally and fattened corporate profits. 

But there has been growing criticism about the plan's muted impact on the wider economy.

Still, the Bank of Japan and International Monetary Fund both recently lifted their projections for the country's growth rate.

A weak yen has helped prop up the economy as it makes Japanese exports more competitive and inflates profits when firms repatriate their foreign-earned income.

An improving global outlook with strong demand for Japanese smartphone parts, memory chips and construction machinery has also been a tailwind, analysts said.

"With growing external demand set to continue, we believe there will be the need for many companies to replace machinery and equipment," Katsunori Kitakura, lead strategist at asset manager Sumitomo Mitsui Trust Group, said before Thursday's GDP figures were released.

Cash-rich firms have been stingy with pay hikes though, which hurts spending and acts like an anchor on the economy.

In March, some of Japan's top companies, including Toyota and Hitachi, announced their lowest wage rises in years.

"Wages are still stagnating, despite sharp falls in unemployment," research house Capital Economics said in a commentary.

"This seems to be because aggressive monetary easing has failed to lift expectations of future price rises among households and firms.

"Unless this changes, the chances of inflation settling at two percent or higher are slim," it added.

The Bank of Japan (BoJ), aiming to achieve two-percent inflation as a key part of Tokyo's growth bid, now expects to reach that goal by 2019 -- four years later than planned.

Despite healthy profits, many Japanese firms remain cautious about the world economy, partly due to worries that US President Donald Trump's protectionist leanings could hurt exports.

Japan has been struggling to defeat years of deflation and slow growth that followed the collapse of an equity and property market bubble in the early nineties.

Falling prices can discourage spending by consumers, who might postpone purchases until prices drop more or look to save money instead. 

That puts pressure on businesses, creating a cycle in which firms then cut back on expanding production, hiring new workers or boosting wages.

Stay up to date on all the latest World news with The New Indian Express App. Download now
TAGS
Japaneconomic growthGDPTokyo 2020 Olympics

O
P
E
N

More from this section

Iran rejects any new nuclear deal proposed by US, France

Facts about the 2015 Iran nuclear deal

In this frame taken from video provided by the CTV Vatican television Pope Francis reads his message for the people of Bangladesh ahead of his weeklong trip to Bangladesh and Myanmar, at the Vatican.|AP

Pope Francis calls for 'reconciliation' at inter-Korean summit

Latest

Government sends second notice to Facebook, Cambridge Analytica

Athletics Federation of India joint secretary Tony Daniel dies at 66

SRFTI student refuses CBFC cut, forgoes national award nomination

J-K political activist Gulam Nabi killed in militant attack

IPL 2018: Delhi Daredevils captain Gautam Gambhir steps down

Karnataka High Court sets aside election of MLA G Manjunath of Mulbagal

Kotkhai rape and murder case: Accused sent to judicial custody

IPL2018
Videos
Godman Asaram Bapu and two others convicted in 2013 rape case
Congress hand stained with Muslims' blood : Salman Khurshid
arrow
Gallery
Robert Downey Jr. arrives at the world premiere of 'Avengers: Infinity War' on Monday, April 23, 2018, in Los Angeles. (Photo by Jordan Strauss/Invision/AP)
IN PICTURES | World premiere of Avengers: Infinity War
Hundreds of people staged tearful tributes Tuesday at Rana Plaza, scene of one of the world's worst industrial disasters in 2013 when the complex of clothing factories collapsed and killed at least 1,130 people. (Photo | AP)
Bangladesh protesters demand justice five years after factory disaster
arrow

Trending

FOLLOW US

Copyright - newindianexpress.com 2018

Dinamani | Kannada Prabha | Samakalika Malayalam | Malayalam Vaarika | Indulgexpress | Edex Live | Cinema Express | Event Xpress

Contact Us | About Us | Careers | Privacy Policy | Search | Terms of Use | Advertise With Us

Home | Nation | World | Cities | Business | Columns | Entertainment | Sport | Magazine | The Sunday Standard