The pace for Japan’s growth beat experts predictions as it soared at a
5.6 percent annual rate in the last quarter of 2005, latest reports
show.
A surge in export trade has led to four consecutive quarters of expansion, and an upturn in domestic spending is an encouraging indicator for a long term recovery.
All this could lead to an interest rate hike by the Bank of Japan if the central bank decides to halt its five year monetary easing policy in response to the nations reversal of fortunes.
Uncertainty about the BOJ’s plan sent the Nikkei-225 down by over 2 percent at the end of last week to 15,713.57, its lowest level for a month. Economists have also observed increased nervousness on the part of American financial institutions towards Japanese shares recently, most notably Morgan Stanley.
GDP gained 1.5 percent in Q4 of 2005 compared with the third quarter, data from the financial branch of the government showed. That surpassed expert’s predictions of 1.2 percent and translates to an annual rate of 5.6 percent, as opposed to the 5 percent predicted.
“When you compare 1 percent growth rate of the U.S. we can clearly see that the Japanese economy is looking very healthy indeed,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in an email to investors. “The picture is far from perfect, of course, with a few areas including consumption possibly dropping back in Q1, but overall the Japanese economic development is driving full steam ahead.”
Interestingly, it has been solid domestic demand that has superseded foreign trade as the main factor pushing the economy forward and spurring the upswing since last year.
Boosted by rises in wages and positive employment figures, private sector consumption jumped nearly 1 percent in Q4. It’s the first time that overall wages, including bonus and overtime pay, have risen since the turn of the century. Retail figures also increased as the harsh winter forced consumers to spend extra cash on home heating and cold weather clothing.
The steady increase in GDP also suggests an upturn in Japan’s exports to its most influential trading partners like China and the U.S., a factor which has had little influence on GDP in previous quarters.
There was also a 2 percent gain in private-sector capital spending, leading many speculators to bet against an immediate BOJ action to tighten credit. A knock on effect of this has been a 1.5 percent fall in 10-year yield government bonds.
A surge in export trade has led to four consecutive quarters of expansion, and an upturn in domestic spending is an encouraging indicator for a long term recovery.
All this could lead to an interest rate hike by the Bank of Japan if the central bank decides to halt its five year monetary easing policy in response to the nations reversal of fortunes.
Uncertainty about the BOJ’s plan sent the Nikkei-225 down by over 2 percent at the end of last week to 15,713.57, its lowest level for a month. Economists have also observed increased nervousness on the part of American financial institutions towards Japanese shares recently, most notably Morgan Stanley.
GDP gained 1.5 percent in Q4 of 2005 compared with the third quarter, data from the financial branch of the government showed. That surpassed expert’s predictions of 1.2 percent and translates to an annual rate of 5.6 percent, as opposed to the 5 percent predicted.
“When you compare 1 percent growth rate of the U.S. we can clearly see that the Japanese economy is looking very healthy indeed,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in an email to investors. “The picture is far from perfect, of course, with a few areas including consumption possibly dropping back in Q1, but overall the Japanese economic development is driving full steam ahead.”
Interestingly, it has been solid domestic demand that has superseded foreign trade as the main factor pushing the economy forward and spurring the upswing since last year.
Boosted by rises in wages and positive employment figures, private sector consumption jumped nearly 1 percent in Q4. It’s the first time that overall wages, including bonus and overtime pay, have risen since the turn of the century. Retail figures also increased as the harsh winter forced consumers to spend extra cash on home heating and cold weather clothing.
The steady increase in GDP also suggests an upturn in Japan’s exports to its most influential trading partners like China and the U.S., a factor which has had little influence on GDP in previous quarters.
There was also a 2 percent gain in private-sector capital spending, leading many speculators to bet against an immediate BOJ action to tighten credit. A knock on effect of this has been a 1.5 percent fall in 10-year yield government bonds.
