Japan enjoys longest GDP growth in 16 years

November 15, 2017

Tokyo- Japan's gross domestic product expanded for seven straight quarters in July-September, the longest growth in 16 years, led by strong exports on the back of the global economy recovery, government data showed Wednesday.

The country's GDP enjoyed such a long spell of expansion for the first time since the eight consecutive growth marked between April-June 1999 and January-March 2001.

The GDP in the second quarter of fiscal 2017 grew 0.3 percent from the previous quarter in price-adjusted real terms, or 1.4 percent on an annualized basis, the Cabinet Office said.

The annualized figure was better than the median forecast of 1.3 percent growth among the 21 economic research institutes polled by Jiji Press.

Although the Japanese economy managed to maintain growth thanks to a rise in overseas demand, the pace of increase slowed due to a fall in private consumption.

In nominal terms, the GDP rose 0.6 percent for an annualized increase of 2.5 percent, the government agency said in a preliminary report.

The slowdown in private consumption stemmed from bad weather, a temporary factor, Economic Revitalization Minister Toshimitsu Motegi told a press conference.

"The government will make efforts to make the trend of economic recovery stronger," he said.

The government will accelerate its work to realize a "revolution" in human resource development, a key policy item for the administration of Prime Minister Shinzo Abe that features free education, Motegi said.

In July-September, real private consumption dropped 0.5 percent on a quarterly basis, the first fall in seven quarters, reflecting the weakness of the service sector, including restaurants and hotels, which was negatively affected by typhoons and a long spell of rain.

Housing investment fell 0.9 percent, reflecting slow demand for both single-family houses and housing for rent.

Public investment shrank 2.5 percent, the first decline in three quarters, as the implementation of the second supplementary budget for fiscal 2016 already passed its peak.

By contrast, corporate capital spending grew 0.2 percent, thanks to brisk demand for ships and industrial machinery, such as semiconductor-related equipment.

Exports rose 1.5 percent, after a 0.2 percent drop in the previous quarter, pushed up by strong demand for automobiles from the United States and Asia. Spending by foreign visitors, included in exports in the GDP statistics, was also strong.

Imports declined 1.6 percent, with the launches of Apple Inc.'s new iPhone models set for late September and November.

Overseas demand boosted Japan's real GDP growth by 0.5 percentage point. Meanwhile, domestic demand pushed down the growth by 0.2 point, making a negative contribution for the first time in four quarters. Jiji Press