Japanese economy spurts –Q4 growth at 4.6 per cent

Tokyo: Recessionary risks for Japan's economy receded as it grew faster in the previous quarter, at 4.6 per cent, than economists anticipated. But deflationary tendencies intensified, even as the GDP deflator, the broadest measure of prices in the economy, fell a record 3 per cent.

The GDP deflator's year-on-year decline is the biggest since 1955, since records first began to be maintained.

According to the Cabinet Office, gross domestic product expanded at an annual 4.6 per cent in the three months ended 31 December. This was more than the 3.5 per cent median estimate of a survey of economists.

The expansion was led by exports that have been boosted by a global recovery.

However, an increase in consumer spending may not sustain as deflationary tendencies strengthen. According to economists, with government stimulus measures set to be withdrawn, Japanese consumers expect prices to fall along with their wages.

Market observers are hopeful that the economy will continue its long, slow haul to recovery even if the government should show little interest in battling deflationary pressures. They attribute this to a rebound being experienced by global economies.