Japan’s economy grew at an annualized rate of 1.4 percent in the October-December quarter, government data showed Thursday, signaling only a modest recovery from a string of natural disasters in the summer that cast doubt on its durability.
The expansion in inflation-adjusted gross domestic product, the total value of goods and services produced, followed a revised 2.6 percent contraction in July-September. It beat the average forecast of 1.19 percent growth made by private-sector economists polled by Kyodo News.
Compared with the previous quarter, the world’s third-largest economy grew a real 0.3 percent, according to preliminary figures from the Cabinet Office.
Private consumption, which accounts for more than half of the nation’s economy, rose 0.6 percent as households spent more on eating out and traveling. Capital expenditure was up 2.4 percent as firms took advantage of record-high corporate earnings to boost capacity and productivity.
Meanwhile, net exports pushed down GDP by 0.3 percentage point, as a 2.7 percent growth in imports outpaced a 0.9 percent rise in exports. Demand from China for high-tech products has suffered in particular from a slowdown in the Chinese economy and an ongoing tariff war with the United States.
Toshimitsu Motegi, minister in charge of economic and fiscal policy, told a news conference that, on the whole, the economy continues to recover moderately but warned that risks abroad — including the heightened trade tensions — “warrant caution.”
Prime Minister Shinzo Abe’s government said last month 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 leverage the success of his Abenomics policy of drastic monetary easing, fiscal stimulus and structural reforms in local and national elections this year.
But Takeshi Minami, chief economist at the Norinchukin Research Institute, said the economic expansion may be nearing an end as a severe labor shortage and tepid wage gains take their toll.
“I think we’ll be seeing more and more signs of a soft landing,” which could be triggered by a fall in household spending following a planned increase in consumption tax — from 8 percent to 10 percent — in October, he said.
In nominal terms, or unadjusted for inflation, GDP grew an annualized 1.1 percent, and 0.3 percent quarterly.
In 2018, the economy grew 0.7 percent in real terms, up for the seventh straight year. Nominal GDP climbed to a record ¥548.5 trillion ($4.9 trillion).
The Cabinet Office is scheduled to revise the October-December GDP figures on March 8, following the release of government data on corporate activities.