Japan's economy defied expert predictions
and grew at its fastest rate since 2007 in Q3 of this year, continuing the
promising recovery from its worst recession since the war.
Monetary easing stimulus by the government
can take much of the credit for the upturn, but the nation has also seen a
massive rebound in its exports, especially cars and home appliances.
A government report released Friday
revealed the expansion is occurring at about double the pace forecast, swelling
by 1.3 percent compared to the previous quarter and nearly 5 percent
annualised.
“We hope that the recovery will continue
into the last quarter of the year, we think it will,” said Stuart Poulson, Head
of Corporate trading at Nikko-Desjardins Asset Management in an email to
investors.
“As long as the current trend in exports stays on track and the
effect from the authorities easing continues then we would say the worst is
over and there will be no second drop.”
Both family spending and corporate
expenditure went up by about 1 percent compared to the second quarter. The best
news, however, was exports which jumped a huge 6.5 percent.
The upswing in fortunes follows a
calamitous series of contractions in the nations export driven economy, although
many specialists are warning that the stellar figures may be in part due to
inventory restocking for corporate entities and said that Q4 may see less
growth.
“You have to take into account the
unsustainable contribution linked to private inventories,” says Kyohei Morita, head
of Asia region economist at Barclays Capital.
However, sentiment is largely positive and
the news from Japan came shortly after revelations that the biggest economies
in Europe, France and Germany, have clawed themselves out of recession in the
last quarter.
Japan tumbled into recession as a flagging
world economy in 2008 resulted in less demand for its major exports such as
electronics and cars. This is a welcome return to positive growth, but many are
cautious and point to a time when the Japanese efforts to stimulate the markets
loses its effect.
Consumer spending is likely to stay low,
especially when one considers the shrinking and ageing demographic of Japans
population, so the country will continue to rely heavily on its export business
to push all round growth into next year.
This may force the authorities to introduce
incentives for domestic demand such as cash hand-outs and further drops in
consumer prices.
