Japan's gross domestic product for the July-September quarter, according to preliminary figures released by the Cabinet Office on Nov. 14, grew 0.6 over the previous quarter for an annualized expansion of 2.5 percent. Some have pointed out that this was slower than in the April-June quarter, when the GDP expanded 0.9 percent, but we should note that the nation's 0.6 percent growth was achieved on top of that strong performance.
The July-September GDP also represents a 2.5 percent growth over the same period last year. Here, I would like to look into the various elements that constitute the current uptrend in the Japanese economy.
The first major characteristic of this growth is that it is being driven by the private sector. Whereas private-sector demand in the July-September period rose 3.1 percent from a year ago, capital formation in the public sector fell 12.6 percent. Private-sector demand more than offset the negative elements in the public sector.