Japan's economy expands 4.6% in Q4
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Japan's Gross domestic product (GDP) rose at an annualized pace of 4.6 percent in the October-December quarter, marking the third consecutive quarter of expansion, according to a preliminary report by the Cabinet Office on Monday.
Driven by healthy increases in private demand and net exports, the fourth quarter economic growth rate in Japan was above the consensus call for an annualized rate of 3.63 percent, the Cabinet Office said, with economists' forecasts ranging from an annualized pace of 2.3 percent to 4.9 percent.
Japan's economic growth in the fourth quarter was led by domestic demand, which rose 0.6 percent from the previous quarter after a downward revision of 0.3 percent for the third quarter.
Domestic demand buoyed the quarter-on-quarter GDP by 0.6 percentage point, as private consumption and capital investment rose, the government report indicated
"While stimulus effects have boosted demand globally, the Asian economies are enjoying a self-sustained recovery with a pickup in domestic demand," said Yasuo Goto, chief economist at Mitsubishi Research Institute in Tokyo.
Fourth quarter GDP growth was also boosted by net exports, which pushed up the overall growth by 0.5 percentage point after adding 0.3 percentage point in the previous quarter, the Cabinet Office said in their report.
However despite the government's fiscal stimulus measures, public investment dropped 1.6 percent in the fourth quarter, after an unrevised 1.6 percent drop in the previous quarter.
Export growth slowed to 5.0 percent on quarter from 8.4 percent in the third quarter, while imports rose 1.3 percent on quarter, but slowing from 5.4 percent increase in the previous quarter.
Private consumption rose 0.7 percent from the previous quarter, contributing 0.5 percentage point to fourth quarter GDP.
Capital spending rose 1.0 percent from the previous quarter, contributing 0.1 percentage point to fourth quarter GDP and marking the first quarter-on-quarter rise in seven quarters.
However, the GDP figures indicated that deflation accelerated in the fourth quarter, with the GDP deflator falling 0.9 percent from a year earlier after falling 0.5 percent in the third quarter.
The domestic demand GDP deflator fell 0.9 percent after posting a 0.2 percent drop in the previous quarter.
The data, combined with machinery orders figures released last week, indicate that capital spending will likely stop falling and level off in the period ahead. However, it remains unclear when capital spending will show a substantial sustained increase, analysts commented.
Japanese GDP stood at 5.08 trillion U.S. dollars at the end of 2009, just above China's 4.91 trillion U.S. dollars.
GDP is the total market value of goods and services produced domestically during a specific period of time. Real GDP figures are adjusted for changes in the value of money or assessed by purchasing power.
