Japan Completes Longest GDP Growth Stretch In A Decade: 5 Picks

In a sign that Prime Minister Abe’s stimulus policies were having their desired impact, data released on Thursday showed that Japan’s economy had expanded for the fifth successive quarter. The rise in Japan’s GDP overshadowed the improvements experienced in the U.S during the first quarter, bringing the world’s third largest economy squarely into focus.

While sluggish inflation continues to be a worry, steady gains over successive quarters suggests that Japan’s growth trajectory is stabilizing. Meanwhile, the recent pickup in consumption is likely to deal with the inflation situation in the near future, which makes this a good time to invest in stocks from Japan.

Record Stretch of GDP Gains

During the first quarter, Japan’s GDP increased by 0.5% on a quarterly basis and at a 2.2% annualized rate. Most analysts and market watchers had expected GDP to come in at 1.7%, which the figure exceeded by a significant margin. Growth also hit its fastest pace since the same period last year. Moreover, Japan’s economy has now expanded for five successive quarters.

This is the also longest stretch of gains recorded since 2005-06. During that period, the economy expanded for six successive quarters. This time around, growth was fueled by an increase in household expenditure and higher export levels. Exports increased by 8.9%, marking the third successive quarter of gains. This was a result of a rise in global demand, particularly for tech related items.

Household expenditure increased by 1.4%, primarily due to an increase in the demand for durable goods. This was the fifth successive quarterly increase for household spending, even though previous increases have been largely moderate in nature.  

Inflation Remains a Worry, Household Spending the Key

Even though the increase in GDP provided proof of steady economic improvement, Japan’s economy minister pointed out that the country was yet to overcome sluggish inflation levels. Economy minister Nobuteru Ishihara’s concerns are justified, since the economy actually contracted by 0.1% in nominal terms. Most corporations remain reluctant to raise price levels. Such a tendency persists despite the fact that a soft yen and rising fuel prices are driving up the cost of imported materials.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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