Japan’s economy picks up pace

World's third-largest economy stuns markets by growing at its fastest pace in a year, driven by household and business spending

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Good news came from Japan as its gross domestic product (GDP) expanded by 0.6 in the first quarter of 2015, reaching an annualised growth rate of 2.4 percent - a much higher result than the market expectation of 1.5 percent. The growth was ignited by inventory as business investment continues to lag. 

The recent data release mirrors a recovery in Japan's lethargic economy as private consumption gains momentum. Household spending increased by 0.4 percent, higher than the 0.2 percent rise anticipated by analysts.

Although there has been a positive push in the Japanese economy, the economy still shows weaknesses in its capital expenditure as companies were still wary of spending their savings.

Prime Minister Shinzo Abe has used inflation as part of a key strategy to revitalise the Japanese economy by pushing companies and consumers to spend more of their savings.

In a further attempt to expand the Japanese economy, Abe took a series of policy measures known as “Abenomics.”

The BOJ expanded their monetary base on Apr. 2013 through the application of a quantitative easing program worth $670 billion. 

After the  Bank of Japan's two day analysis of the data, the central bank is likely to keep its positive outlook on its fragile economy while it boosting its monetary policy program. 

TRTWorld and agencies