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Japan's economy shows modest recovery in the October-December quarter

Japan's economy grew at an annual rate of 1.4 percent in the October-December quarter, government data showed Thursday, showing only a modest recovery from a series of summer natural disasters that doubt its sustainability.

The expansion in inflation adjusted gross domestic product, the total value of goods and services produced followed a revised 2.6 percent summary in July-September. It polled the average growth forecast of 1.19 percent of private economists like Kyodo News.

Compared to the previous quarter, the world's third largest economy grew by a real 0.3 percent, according to preliminary figures from the Cabinet.

Private consumption, which accounts for more than half of the country's economy, rose 0.6 per cent as households spent more on eating and traveling. Investments increased by 2.4 percent, as companies used record-high corporate earnings to increase capacity and productivity.

At the same time, net exports slowed GDP by 0.3 percentage points, as an import increase of 2.7 per cent increased with a 0.9 per cent increase in exports. Demand from China for high-tech products has been particularly affected by a slowdown in the Chinese economy and an ongoing wage war with the United States.

Toshimitsu Motegi, Minister for Economic and Financial Policy, told a press conference that the economy is continuing to recover moderately but warned that risks abroad – including the increased trade tensions – "warn caution".

Prime Minister Shinzo Abe's government said last month that the Japanese economy is likely to be in the midst of its longest expansion phase since the end of World War II.

His liberal democratic party hopes to exploit the success of his Abenomics policy of drastic monetary relief, fiscal stimulus and structural reforms in local and national elections this year.

But Takeshi Minami, chief economist at Norinchukin's research institute, said that economic expansion can come close to an end as a severe labor shortage and lukewarm wage gains take their toll.

"I think we will see more and more signs of a soft landing," which can be triggered by a household spending following a planned increase in consumption tax – from 8 percent to 10 percent – in October.

In nominal terms or unchanged for inflation, GDP rose 1.1 percent annually and 0.3 percent quarterly.

In 2018, the economy grew by 0.7 percent in real terms up to the seventh straight year. Nominal GDP went up to the record $ 548.5 billion ($ 4.9 billion).

The cabinet office is scheduled to revise the GDP figures in October-December 8 March following the publication of the Government's information on business activities.

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