Japan’s economy experiences growth spurt

19 May 17

Japan has enjoyed its longest growth streak since 2006, with its economy expanding for the fifth consecutive quarter in the first three months of this year.

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Japanese prime minister Shinzo Abe

Japanese prime minister Shinzo Abe has been fighting economic stagnation and deflation for years.

 

The preliminary figures, issued yesterday, will be welcome news to prime minister Shinzo Abe, who has been trying to break a cycle of sluggish growth and deflation with a package of public spending and extraordinary monetary policy branded ‘Abenomics’.

Japan’s first quarter growth also marked the fastest in a year, boosted by exports and private consumption.

Growth rose by 0.5% from January to March, with the annualised rate (2.2%) exceeding expectations and outpacing that of other major economies.

However, policymakers and observers have long-argued pay rises are needed to bolster consumer demand and drive a sustained recovery.

Marcel Thieliant, analyst at Capital Economics, said that while the firm expects above-consensus growth of 1.5% for the entire year, “sluggish wage growth combined with the rebound in inflation is taking its toll on household incomes”.

“We therefore expect a slowdown in the second half of the year,” he noted.

 

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