Japan's Q4 growth better than expected

JAPAN'S economy did better than first thought in the last quarter of 2012, eking out a slight expansion instead of shrinking in a boost for Prime Minister Shinzo Abe's policies to end two decades of deflationary stagnation.

The government yesterday upgraded its annualised growth figure for the fourth quarter to 0.2 per cent, suggesting the world's No. 3 economy is emerging from recession.

The change raises growth for full-year 2012 to two per cent from the originally recorded 1.9 per cent. Growth was flat in the October-December period from the previous quarter.

Preliminary data had reported a 0.4 per cent contraction from a year earlier, and a 0.1 percent contraction from the previous quarter.

The revision reflected higher than originally reported corporate spending and private consumption.

Meanwhile, the Finance Ministry said Japan logged a deficit in its current account of 364.8 billion yen (RM11.8 billion) in January, the third straight month of deficit.

A sharp weakening in Japan's currency in recent months is seen as a boost for the country's export manufacturers - especially big names such as Toyota Motor Corp and Sony Corp, but it also has raised costs for imports of fuel and other commodities, sapping the country's usually hefty trade surpluses.

The yen rose to a more than three-and-a-half-year high against the US dollar yesterday, as traders sold dollars in reaction to positive US data and to perceived risks from North Korean threats of retaliation for imposition of sanctions over its nuclear weapons programme.

Meanwhile, share prices in Japan also surged to their highest level in over four years as investors bought export-related shares. The Nikkei-225 gained 2.6 per cent, or 315.54 points, to 12,283.62, its seventh straight session of gains.

While rallies in overseas markets have helped boost the Nikkei, share prices have also risen in anticipation that an easing of monetary policy and robust government spending under Abe, who took office in late December, would help Japan escape years of deflationary stagnation.

The nomination of Haruhiko Kuroda to become Japan's next central bank governor has further lifted sentiment. Kuroda has expressed strong support for Abe's economic strategy and for quickly achieving a two per cent inflation target set by the central bank and government in January. AP