The Japanese economy appears to have expanded during the October-December period, marking the first growth in three quarters thanks to a long-awaited recovery in consumer spending.
Real gross domestic product grew an annualized 4% last quarter, according to the average estimate of 10 private-sector research institutes.
The government’s official GDP figures will be released by the Cabinet Office on Feb. 16. GDP for the July-September quarter declined by an annualized 1.9%, prompting Prime Minister Shinzo Abe to postpone a consumption tax hike by 18 months. The increase to 10% was originally scheduled for this October.
Almost all of the economists believe Japan’s economic recovery will continue, driven by falling crude oil prices.
“Lower import costs boost corporate profits, and consumers also benefit substantially through lower prices for gasoline and electricity,” says Yoshiki Shinke at the Dai-ichi Life Research Institute.
And with the drop in crude prices slowing inflation, “real wages will increase and stimulate the economic recovery,” says Mitsumaru Kumagai at the Daiwa Institute of Research.
For the full fiscal year through March 31, the economists on average predict that the economy will contract 0.5% in real terms, but they project 1.9% growth for fiscal 2015. The government’s economic outlook, released earlier this month, calls for 1.5% growth in fiscal 2015. So private-sector economists are predicting stronger growth than the government, which tends to make bullish projections.
