Japan held on to its status as the world’s second biggest economy as better-than-expected GDP data raised hopes of a sustained recovery from its deepest recession since the war. GDP grew at 1.1 per cent between September and December, which corresponds to a yearly rate of 4.6 per cent, the government said.
The growth proved enough to stave off a challenge from China, due largely to government measures to stimulate Japanese spending on fuel-efficient cars and ‘green” consumer goods. But the growth data was tempered by continued anxiety over falling consumer prices and weak demand. The GDP deflator, the broadest measure of prices, fell 3 per cent from a year earlier, its biggest drop since records began in 1955.
The government, meanwhile, faces the tricky task of reining in huge public debt and honouring spending commitments in its record ¥92trn budget plans.
In a sign of the impact of massive stimulus packages introduced last year, domestic demand helped boost GDP for the first time in seven quarters. Consumer spending, which accounts for about 60 per cent of the economy, rose 0.7 per cent from the previous quarter. The figures also pointed to growing confidence among firms, with corporate investment in plants and equipment rising by 1 per cent, its first increase since the first quarter of 2008. — © Guardian Newspapers Limited, 2010
