Japan comes out of recession with 0.6% growth

16 Feb 15
Japan’s economy recovered from recession in the last quarter of 2014, growing by 0.6% after two quarters of decline. If sustained over a year, this would take Japanese growth to 2.2%.

By Judith Ugwumadu | 16 February 2015

Japan’s economy recovered from recession in the last quarter of 2014, growing by 0.6% after two quarters of decline. If sustained over a year, this would take Japanese growth to 2.2%. 

However, this growth rate was weaker than economists’ predictions of 3.7%, made in a Reuters poll, and suggested only a moderate pace of recovery.

External demand added 0.2 percentage point to growth in the quarter, a sign the weak yen was finally driving up exports, Reuters reported. But consumer spending remained weak due to sluggish wage growth in employee compensation.

Private consumption, which makes up about 60% of the economy, rose 0.3% in the final quarter of 2014, less than a median market forecast of a 0.7% increase.

Economists IHS Global Insights said the growth rate would allow the Bank of Japan to maintain the current monetary easing over the near term unless annual wage negotiations between companies and unions prove unsuccessful and the economy shows signs of contracting.

‘That said, the dependency on the bank’s monetary policy could increase unless the government accelerates deregulation to boost private demand,’ said Harumi Taguchi, principal economist at IHS Global Insight.

Japan's economy slid into recession in July-September last year, forcing Prime Mininster Shinzo Abe to delay a second increase in sales tax that had been planned for October 2015.

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