Investing

Japan GDP Jumps 3.5%: Economic Miracle Resurrected?

The Japanese economic miracle, which died more than two decades ago, may be in the early stages of resurrection. First-quarter gross domestic product (GDP) rose 3.5%, a number that was not matched in the same period by any of the EU economies or the United States. Japan’s new central bank bond-buying plan and the government’s stimulus may allow the recovery trend to rush into the current quarter and beyond.

Bloomberg said of Japan’s GDP jump:

Private consumption, making up 60 percent of GDP, contributed 2.3 percentage points to the jump. Nominal GDP, which is unadjusted for changes in prices, rose 1.5 percent, also the most in a year.

Today’s report shows while consumers — aided by a stock-market surge — are responding to the reflation campaign mounted by Prime Minister Shinzo Abe and Bank of Japan chief Haruhiko Kuroda, companies remain cautious. That may change as the yen’s 20 percent slide against the dollar in the past six months spurs profits and Abe’s administration embarks on reducing regulations.

“Japan is clearly back from stagnation last year,” said Naoki Iizuka, an economist at Citigroup Inc. in Tokyo. “The key from here is whether Abe can unveil a strong growth strategy. If he succeeds, that will boost business investment to support growth.”

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