Belfast Telegraph

Saturday 25 October 2014

Japan staging economic revival

Japan's economy expanded at a six per cent annualised rate in the July-September quarter (AP)

Japan's government said the economy expanded at a 6% annualised rate in the July-September quarter as the country staged a recovery from the devastating earthquake and tsunami in March.

The real gross domestic product reading marks the first expansion for the world's third-largest economy in four quarters.

The Japanese cabinet office said that the result translates to GDP growth of 1.5% from the previous quarter.

The March 11 earthquake and tsunami killed thousands of people and wiped out large swathes of Japan's north-eastern coast.

The disasters damaged many factories in the region, causing severe shortages of parts and components for manufacturers across the country, including carmakers. The tsunami also crippled a nuclear power plant, adding to the difficulties faced by businesses and households.

Since then, the country has steadily restored its factories, helping the economy rebound despite the threats of a financial crisis in Europe, a slowing global economy and a strong yen.

Consumer spending, which accounts for some 60% of the economy, climbed 1% from the previous quarter. Capital investment by companies rose 1.1%.

Analysts, however, say that the strong third quarter numbers are unlikely to last.

Credit Suisse economist Hiromichi Shirakawa said Japan had benefited from a sharp increase in exports and industrial production into the early summer. But the economy has "already lost upward momentum since August," he said in a report last week.

He expects Japan's economy to weaken in coming months and forecasts GDP to contract in the fourth quarter.

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