Japan Pulls Out of Recession, But Economic Growth Disappoints

Japan emerged from a brief recession in the fourth quarter of last year, but the growth was less than forecast in a sign of continued problems for the nation’s long-struggling economy.

The government reported Monday that total economic output, or gross domestic product, expanded at a 2.2 percent annual rate from October through December.

It was the first growth since early in 2014, although economists had expected a stronger bounce-back of about 3.6 percent annual growth.

Japan is struggling along with many of the world’s top economies, aside from the U.S., which poses trouble for American exporters.

The more robust U.S. economy has caused the value of the dollar to soar against the yen and other currencies, making American products more expensive to purchase overseas.

A sharp hike in Japan’s sales tax in April, meant to reduce the nation’s huge public debt, caused a steep drop in consumer spending that pushed the country into its fourth recession since the 2008 financial crisis.

A recession is two consecutive quarters of economic contraction.

Japan’s economy contracted at a 6.7 percent annual rate in the second quarter of the year, followed by a 2.3 percent contraction in the third quarter.

The recession was a blow to Prime Minister Shinzo Abe’s plan — dubbed Abenonmics — to turn the nation’s economy around after decades of stagnation and deflation.

Economists expected a brief recession, and that was confirmed as the economy returned to growth in the fourth quarter.

But there were troubling signs in the government’s report.

Consumer spending increased just 0.3 percent from the previous quarter. Capital spending by Japanese businesses rose 0.1 percent in fourth quarter.

Exports jumped 2.7 percent as the weak yen has made Japanese products cheaper to foreigners.

Last month, the Bank of Japan said it would take more aggressive action to try to boost prices and reverse a long period of deflation.

This article appeared in print in the February 17th, 2015 edition of Hamodia.