Japan’s economy has posted seven consecutive quarters of growth in what has been the longest run of growth in over a decade. Latest statistics showed gross domestic product (GDP) increased at an annualized rate of 1.4% in the 3rd quarter of 2017.
The latest quarterly numbers come after nearly 5 years of controversial economic stimulus by the Bank of Japan at the behest of Prime Minister Shinzo Abe. The expansion has been driven largely by a robust export sector buoyed by stronger global demand for Japanese products and has helped offset weaker consumer spending at home.
Analysts at Taipei, Taiwan-headquartered boutique brokerage, Clifford Beaumont say they believe the economy has harnessed healthy export demand which has been growing at 6%. They believe that with the global economy recovering almost in lockstep and with moderate growth in the US, the Euroepan Union and other parts of Asia, Japan’s exporters have enjoyed timely support.
In addition to the growth in the export sector, it is Mr Abe’s economic policies – colloquially referred to as “Abenomics” to which some are attributing the long run of positive growth. By appointing a central bank governor who was prepared to undertake unprecedented levels of quantitative easing, Mr. Abe set about combating nearly two decades of anemic economic growth and deflation.
Clifford Beaumont analysts have welcomed the economic data but they remain cautious on how the Bank of Japan intends to exit from unusual and exigent economic policies that have seen interest rates cut into negative territory and trillions of yen created out of thin air to buoy the pries of every asset from bonds to ETFs and equities.
For the time being, however, it appears that QE has worked in Japan although inflation has yet to reach the BoJ’s target rate of 2% and consumers remain reluctant to spend.