The July-September GDP data cast doubts over sustainability of the upturn in the Japanese economy. The fourth quarterly growth in a row was underpinned by public works projects financed by the government's stimulus package, while exports faltered after growing for two quarters and consumer spending appears to have lost steam.
It was just about a year ago that the "Abenomics" boom in the stock market began — when then Prime Minister Yoshihiko Noda of the Democratic Party of Japan vowed to dissolve the Lower House and hold a general election, in which the Liberal Democratic Party led by Shinzo Abe was deemed certain to seize power and usher in a new set of economic policies. The large fiscal stimulus and the bold monetary easing measures introduced after Abe took office in December have — despite some ups-and-downs — pushed up share prices and lowered the yen's value so far.
It's time that private-sector demand took over as the main driver of growth, and Abe needs to flesh out his growth strategy — which has so far failed to impress the market — in ways that support self-sustaining corporate activities and private consumption.