A significant jump in consumer spending allowed the Japanese economy to continue its modest growth with a 3.8 percent annualized GDP growth rate for the latest quarter.
Experts had projected a much lower rate in the face of a strong yen and its effect on exports. The previous quarter’s growth was only 1.9 percent.
Much of the boost in consumer spending can be attributed to the automobile and tobacco industries. A clean energy initiative about to expire in the country led to a rush to buy up fuel-efficient cars. Also, with a new tax on tobacco upcoming at the start of October, smokers were purchasing cheap cigarettes while they still could.
The spiralling yen will no doubt still have a say this quarter, with analysts predicting the currency will have a negative effect on growth as larger export firms, most notably in the electronics industry, cut their projections.
“It’s not the time to get carried away with the GDP figures,” says Credit Agricole analyst Susumu Kato. “At the end of the year we are going to see some payback as spending drops back to normal levels.”
According to a report by leading asset managers in Japan, such as Clarus China Everbright, the yen actually weakened slightly in the afternoon Tokyo session to 82.73 per dollar on news of the GDP growth, compared to 82.46 prior to the data being made public. The Nikkei 225 also saw a slight jump of nearly 1 percent to 9,812.91.
In a Bloomberg survey of 20 prominent analysts, the average GDP expansion forecast for the last quarter was 2.4 percent. Many of those questioned, however, think that GDP will contract in the coming months.
Kohei Okazaki, assistant head analyst at Nomura Securities said, “To be honest I think we were lucky not to see a slowing down in the last quarter. Some of the major factors keeping the economy afloat were one off calculations and we are not going to have them moving forward, so the overall outlook is not great.”
One fortunate eventuality was the result of the unusually hot summer which boosted air conditioner purchases and spurred household spending, which climbed over 1 percent for the quarter. The figures helped counter the lack of growth in exports, which flattened out.
The nation’s economy minister, Banri Kaieda, said that “growth has been helped by a temporary rise in consumer purchasing”.
