Japan's economy posts strongest growth since 2007
Posted: 16 November 2009 0847 hrs

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TOKYO: Japan's economy grew at the fastest pace in two and a half years in the third quarter of 2009, smashing market forecasts and extending a recovery from the worst downturn in decades, data showed on Monday.

The world's second largest economy expanded 1.2 per cent in July-September from the previous quarter – 4.8 per cent on an annualised basis, the government reported.

It was the best performance since January-March 2007 and much better than analyst projections for an annualised rate of less than three per cent.

Asia's biggest economy posted a second straight quarter of positive growth as it emerges from a severe year-long recession on the back of rebounding exports and the government's massive stimulus spending.

Exports soared 6.4 per cent quarter-on-quarter in July-September, while corporate capital expenditure rose 1.6 per cent and household spending went up 0.7 per cent.

Japan sank into recession in the second quarter of 2008 as the global economic downturn battered demand for its cars, electronics and other exports.

The economy returned to positive growth in April-June of this year, expanding 0.7 per cent quarter-on-quarter, but there are concerns the recovery could lose steam as the boost from the government's pump-priming efforts fades.

Renewed deflation is seen as a risk to the recovery, with the central bank predicting three straight years of falling consumer prices.

Japan's economy should enjoy a "sustained recovery into October-December and onwards" but growth will slow to 0.2 per cent quarter-on-quarter in the fourth quarter of this year, Calyon economist Susumu Kato predicted.

Other recent data have also painted a picture of an economy that is slowly getting back on its feet, with the unemployment rate falling to 5.3 per cent in September and factory output rising for a seventh straight month.


- AFP/so