business

Japan's economy grows for 8th straight quarter

14 Comments
By Miwa SUZUKI

Japan's economy grew for the eighth straight quarter at the end of 2017, government data showed Wednesday, its longest period of expansion since the "bubble" boom days of the late 1980s.

Gross domestic product in the fourth quarter of last year expanded 0.1 percent from the previous three months, the Cabinet Office said.

But the growth rate fell short of market expectations of 0.2 percent and represented a slowdown from the 0.6 percent in July-September.

At an annualised rate, the world's third largest economy grew 0.5 percent.

"The growth rate for the last quarter was very low compared with the bubble period but the economy is solid enough," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"There are lingering worries over consumption but we can expect the economy to pick up further if 'shunto' wage hikes are better than the previous years," he said, referring to collective wage negotiations between labour and management held every spring.

"The current expansion could be extended further," he told AFP.

For the calendar year 2017, the economy grew 1.6 percent, against 0.9-percent in 2016.

Japan's Minister for Economy, Trade and Industry Toshimitsu Motegi said the current expansion was solid compared with the more volatile "bubble" boom in the 1980s, according to Bloomberg News.

Amid speculative investment in land and stocks on low interest rates, the Nikkei stock index hit almost 40,000 in 1989 -- nearly double its current level.

The bubble burst at the start of the 1990s, ushering in a period of low or no growth known as the "lost decades".

The current period of growth is good news for Prime Minister Shinzo Abe, who has been trying to fire up the economy with his pro-spending policy dubbed Abenomics since he took office in late 2012.

Junko Nishioka, chief economist at Sumitomo Mitsui Banking Corp, also said an uptick in income suggested the Japanese economy would expand further.

Abenomics is providing "a wide range of tax measures quite beneficial to Japanese firms", she said, with the current expansion phase less reliant on exports.

"Compared to the bubble economy, the Japanese corporate sector is very cautious in its investment, in other words the signs of a bubble are contained compared to 30 years ago," Nishioka added.

Bank of Japan Governor Haruhiko Kuroda, who looks set to stay at the helm until 2023, has vowed to maintain a loose monetary policy given still weak inflation.

The Japanese economy has enjoyed a period of largely export-driven growth, helped by a recovering global economy.

It has also got a shot in the arm from domestic demand spurred by infrastructure upgrades ahead of the 2020 Olympic Games.

However, with wage growth and consumption persistently lukewarm, the economy is still battling to make a clear break from deflation.

Minami, at Norinchukin, warned low wage hikes could derail the scenario of continuing growth.

"We have seen financial market turbulence in February. If companies take this as an excuse to resist wage hikes, it would darken the scenario for a long-lasting expansion," he said.

© 2018 AFP

©2018 GPlusMedia Inc.


14 Comments
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Growth of 0.5 percent is essentially stagnation.

3 ( +8 / -5 )

Incredible news! Am definitely seeing a big uptick in business activity and wage growth on my end

0 ( +5 / -5 )

A muddle-along growth rate. Better than negative though.

By comparison, US GDP growth in Q1 is estimated at 4.0% (real, seasonally adjusted annual rate, as of Feb 9).

https://www.frbatlanta.org/cqer/research/gdpnow.aspx

3 ( +5 / -2 )

Abenomics is providing "a wide range of tax measures quite beneficial to Japanese firms", she said, with the current expansion phase less reliant on exports.

But is Abenomics providing a wide range of tax measures quite beneficial to Japanese HOUSEHOLDS? No.

1 ( +3 / -2 )

Japanese companies should provide at least 3 % wage hike to the workers as suggested by PM Abe to spur continuous growth of the Japanese economy. Abenomics has now started showing results which is amply reflected the growth the GDP of the country.

2 ( +6 / -4 )

Growth of 0.5 percent is essentially stagnation.

Not if your population is declining. Japan often outgrows its OECD fellow members GDP per capita. GDP alone is merely an aggregate, and premised on the belief that bigger is better. In fact. the world's highest living standards are found in countries with small populations, and hence small economies.

3 ( +5 / -2 )

More smoke and mirrors statistics. The economy expanded by a minuscule amount and has been expanding by similar minuscule increments for a short period of time. However, this is not due to economic growth. It is due to cut backs in salaries and benefits in corporations putting their profits up. In other words, the economy is expanding at the expense of the workers, while the corporations fill coffers.

2 ( +7 / -5 )

Disillusioned pretty much nailed it

-1 ( +4 / -5 )

0.5% growth doesn't even keep up with the annual increases in tax and cost of living, what a joke.

0.5% at a time when the world's stock markets are booming and seeing all time highs.

makes one feel a little nervous, what's this economy going to do when the bulls are replaced by the bears. we're long overdue for a market correction. if we can only manage 0.5% during the best economic climate in decades...

0 ( +4 / -4 )

When the GDP is at or below inflation there is a problem. And the Cabinet Office conveniently left that info out.

-1 ( +1 / -2 )

Growth is still growth!

What is with this constant need to criticise and talk down every little bit of good news? Seriously,  with the way the world is at the moment any positive news that happens needs to be encouraged!

1 ( +3 / -2 )

Ok class let us learn a little economics. Ok?

First:

GDP = C + I + G + (X – M) or GDP = private consumption + gross investment + government investment + government spending + (exports – imports). 

So the following comment is total BS:

 "It is due to cut backs in salaries and benefits in corporations putting their profits up. In other words, the economy is expanding at the expense of the workers, while the corporations fill coffers."

Second,

Japan reports real gnp.

Real GDP is a measurement of economic output that accounts for the effects of inflation or deflation. 

So the following comment is total BS again:

"When the GDP is at or below inflation there is a problem. And the Cabinet Office conveniently left that info out."

3 ( +4 / -1 )

What is with this constant need to criticise and talk down every little bit of good news? 

Because most of the JT posters from years ago predicted that Japan is headed one way: down. They confidentally predicted debt crisis, shriveling growth, collapse in the yen, etc. Since current events prove them to be beyond wrong, they need to invent an alternate reality.

-1 ( +1 / -2 )

Yet, I have not seen my pay nor that of anyone I know here increase !

-1 ( +1 / -2 )

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