Japan's economy beat expectations in the third quarter thanks to exports, according to government data. Good news for the Abe administration, though a slowdown is expected in the fourth quarter.
Government data released Monday showed the world's third largest economy grew 0.5 percent in the third quarter for an annualized 2.2 percent GDP gain so far in 2016.
This easily exceeded expectations for a 0.2 percent growth rate in quarter three, in large part due to exports.
Japanese Prime Minister Shinzo Abe introduced spend-for-growth policies after coming into office in 2012. Abe's mix of monetary easing, government spending and red-tape slashing weakened the yen and caused stocks to rise, making exports more inviting, especially in Europe. Exports rose 2 percent in the third quarter against a 1.5 percent fall in the second quarter.
Private consumption, which makes up 60 percent of output, edged up 0.1 percent quarter-on-quarter, unchanged from the second quarter, according to the Cabinet Office.
The Japanese yen, considered a safe haven during uncertain times, has been strengthening since the beginning of the year and got a bump after the UK voted to leave the EU in June. But it weakened after billionaire Donald Trump won the US presidential election last week.
The yen was at a near four-month low against the US dollar on Monday, making the export outlook seem bright.
"Third quarter GDP was a positive surprise, it should be a relief for Japanese policymakers," said Kohei Iwahara, an economist for Natixis Japan Securities, speaking with Agence France-Presse. "However, exports are making all the growth, mainly due to a pick-up in the eurozone, so it could be a one-off windfall. I would expect a slowdown in the fourth [quarter]."
Trump's election may wreak havoc on one of Abe's pivotal plans. Trump is strongly against the Trans-Pacific Partnership (TPP), which encompasses 12 countries that make up about 40 percent of the world economy.
The TPP would revive growth in Japan and kick-start the export sector. Critics, including Trump, say it would cost American jobs. The pact has been signed but not ratified by American lawmakers. Japan's lower house of parliament passed the bill last week and it is currently being discussed in the upper house.
Thought the Bank of Japan announced earlier this month that it had pushed back the timeline for hitting its target 2 percent inflation rate, the bank said it now expects to hit the mark by March 2019 - four years later than its original target.
kbd/cmk (AFP, dpa)