Japanese economy grew faster than expected in Q3 2016

Japanese economy grew faster than expected in Q3 2016, which is the third consecutive period expansion. Good data as a whole, however, include slow domestic consumption. The Japanese GDP expanded by 2.2% yoy in Q3 2016 amid expectations of only 0.9% increase. With the reported growth, the country sets longest series of increases since 2013.

Surprisingly the good performance is due to a rebound in exports, which increased by 2% compared to the previous quarter, while on year-on-year basis the growth is 8.1%. According to the government, the growth of export of components of smartphones, including semiconductors.

However, the data on the domestic economy has a different trend, as household spending and capital investment, which together form 70% of GDP, remained almost unchanged on a quarterly basis despite the efforts of Prime Minister Shinzo Abe to encourage companies to spend more. The government of Abe tried to achieve growth driven by internal forces, but the data for the third quarter indicate that growth relies on exports.

According to many economists the Japanese households still refrain from spending because many officials have not seen significant wage increases. The businesses in turn care costs because the strong yen weighs on profits from abroad when converted into local currency.

Among positive aspects in the report are private investment in housing, which grew by 2.3% compared to the previous quarter and the continuing rise in tourism. According to the economists, the Japan’s economy is expected to continue its gradual recovery.

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