Japan economy expands at 2.2 percent annual pace in Jan-Mar


The pick up in growth was driven by consumption and exports, highlighting how the weaker yen since the election of Donald Trump as United States president last November has helped steady Japan's economy, especially the trade account.

Corporate capital spending, a key indicator watched closely by the government of Prime Minister Shinzo Abe, gained 0.2 percent, following a 1.9 percent gain in the previous quarter.

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

Data out yesterday showed GDP rose at an annual rate of 2.2% in the three months to March, according to the country's Cabinet Office, marking five quarters of continuous output growth.

Mr Abe's grand plan to kick start the world's third largest economy, known as "Abenomics", was aimed at tackling almost two decades of stagnant growth and falling consumer prices.

The GDP data came as a relief to Abe and policymakers trying to encourage frugal Japanese consumers and companies to spend more and buttress economic growth.

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A weak yen has helped prop up the economy as it makes Japanese exports more competitive and inflates profits when overseas income is repatriated.

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

Analysts said that the economy is enjoying comfortable growth driven by both domestic and external demand. That was ahead of market forecasts for an increase of 1.7%, and followed an upwardly-revised December quarter figure of 1.4%. Real wages also were losing ground, she said. "However we expect a slowdown in the second half of the year, ' he said".

"The Japanese economy probably won't grow dramatically, but it's not about to shrink either".

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.

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