Japan’s economy got back on the growth track in the fourth quarter, after a brutal rise in sales taxes in April had sent it reeling for two straight quarters.
Gross domestic product expanded by 0.6% on the quarter, leaving it up 2.2% from a year earlier, according to government data. While that’s not a bad clip by the standards of recent Japanese history, it’s still less than the 0.9% expected by economists and it would look a lot worse if the sharp decline in the yen towards the end of last year hadn’t given exporters a much-needed boost. The annual figure was also well short of the 3.7% rate forecast.
The Ministry of Economy reported that activity had appeared to weaken at the end of the year, with industrial output growth slowing to 0.8% from 1.0% in November.
The economy had gone into reverse in the spring after a sharp rise in value added tax badly dented confidence among businesses and consumers, prompting the Japanese Central Bank to ramp up its monetary stimulus programs and leading Prime Minister Shinzo Abe to call snap elections as a national vote of confidence in his economic strategy for dragging the country out of a 20-year slump.
The Bank of Japan’s hyperactivity has had a massive impact on the country’s international competitiveness over the last two years, rebalancing the scales with China, now the region’s largest economy. While China has kept its currency reasonably stable against the dollar, the yen has fallen sharply, effectively redirecting international demand away from mainland and to its own, traditionally more expensive and higher-tech factories.
The yen has now fallen so far that even the Chinese are starting to accuse it of dumping products on world markets. Japan’s economy ministry said in a statement Monday it would appeal to the World Trade Organization about anti-dumping duties that China has put on imports of stainless steel pipes from Japan. The Chinese steel industry is suffering particularly acute problems with overcapacity at present.