Stimulus measures boost Japan's growth

Now Reading:

Stimulus measures boost Japan's growth

Text size Aa Aa

Japan’s economy enjoyed rapid expansion in the first three months of the year.

Gross domestic product rose by a better than expected 0.9 percent from the previous quarter.

That equated to growth of 3.5 percent from the same period last year.

It is the first hard evidence that sweeping stimulus measures are starting to work.

The government’s plan – which includes the Bank of Japan flooding the economy with money – has sent the yen sharply lower against the dollar and boosted share prices.

But Takuji Okubo, Chief Economist with Japan Macro Advisors, pointed out the private sector is still lagging: “When you look into the contents of the growth, you do see that half of the growth is coming from public demand such as public works, government consumption [spending] and that is concerning and that says that Japan’s economy is still not self-sustaining.”

The government has yet to reveal its plans for deregulation and fixing the country’s underlying structural problems.

Economists believe that companies, which up till now have been cautious about their future, should start spending more. Data for core machinery orders, due out this week, are expected to show an increase.

With the yen at a four and a half year low against the dollar, exports have picked up and made a better than expected contribution to GDP in the first quarter.