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Japan'S GDP grows for 7 straight quarters, outlook remains solid

2015-02-27T001956Z_92533489_GM1EB2R0N1201_RTRMADP_3_JAPAN-ECONOMY-SPENDING.jpg
Japan's economy shrugged off a consumer spending dip in the third quarter to post the longest period of uninterrupted growth in more than a decade, showing strong fundamentals.

[TOKYO] Japan's economy shrugged off a consumer spending dip in the third quarter to post the longest period of uninterrupted growth in more than a decade, showing strong fundamentals.

The economy expanded at a 1.4 per cent annualised rate in July-September on strong exports and slightly above the median estimate for annualised growth of 1.3 per cent. That followed revised annualised growth of 2.6 per cent in April-June.

Weakness in consumer spending is expected to be temporary because the economy is near near full employment, which should bolster domestic consumption in the future.

Rising capital expenditure and exports are also expected to keep the economy growing, which should ease some concerns about sluggish inflation.

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Gross domestic product (GDP) grew 0.3 per cent comapred to the previous quarter, which matched the median estimate and followed a 0.6 per cent quarter-on-quarter expansion in April-June, Cabinet Office data showed on Wednesday.

The results show that Japan's economy has grown for the seventh straight quarter, the longest period of expansion since an eight-quarter run from April-June 1999 to January-March 2001.

External demand - or exports minus imports - was the biggest reason for expansion, adding 0.5 per cent to growth. Negative external demand subtracted a revised 0.2 percentage point from GDP growth in April-June.

Private consumption, which accounts for about two-thirds of GDP, fell 0.5 per cent from the previous quarter, more than the median estimate of a 0.3 per cent contraction to mark the first decline since October-December 2015.

Capital expenditure rose 0.2 per cent in July-September from the previous quarter, less than the median estimate for a 0.3 per cent increase.

Japan's government will announce a package of economic measures by year-end aimed at increasing investment in skills training and raising productivity.

This long run of growth should encourage the Bank of Japan to stick with the current monetary easing framework, given its argument that inflationary pressure will percolate through the economy as long as growth is on track.

REUTERS

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