Japan's economic spurt still going strong after nearly 5 years
By Yuri Kageyama
By Yuri Kageyama
TOKYO — Japan's economy has marked its longest economic expansion since World War II, according to a government report.
Japan racked up its 58th month of recovery — nearly five years — starting from January 2002, the Cabinet Office said Wednesday. That surpasses the previous record from October 1965 to July 1970 — dubbed here "Izanagi keiki," after an ancient god.
The report takes into account a variety of economic factors besides gross domestic product to determine whether the economy is expanding or shrinking.
But the Cabinet Office also warned about recent weakness in consumer spending, and downgraded its monthly assessment of the economy for the first time since December 2004.
Japan has emerged from a decade-long stagnation and corporate profits are growing, but there are also signs that the Japanese people aren't getting all the perks from the recovery, the government said.
The Japanese economy is increasingly global, with companies producing and hiring workers abroad as well as in Japan. That means that some of the benefits of higher corporate profits won't trickle down to ordinary Japanese workers, as they are being shared with overseas operations.
The double-digit growth that Japan experienced during the Izanagi era, which coincided with the nation's postwar reconstruction and modernization, was far more stellar than the growth being marked these days. The economy grew at an annual pace of 2.0 percent in the third quarter.
The latest government report said consumer spending was flat, and warned that surging oil prices pose a danger to economic growth. It also noted that corporate investments were on the rise and company profits were improving.
The report also downgraded the assessment of the U.S. economy — Japan's biggest export market — saying that the pace of expansion is slowing down. But regional economies elsewhere, such as China and Europe, are growing.
Prime Minister Shinzo Abe brushed off the less upbeat view on the economy.
"There's no change to the overall trend for a continuing economic recovery," he said. "We do need to watch moves in consumer spending carefully."
The report's cautious view on consumer spending, which makes up more than half of Japan's economy, may influence a decision by the Bank of Japan on when to next raise interest rates.
The central bank raised a benchmark interest rate to 0.25 percent from zero in July, the first rate hike in six years. It had kept interest rates at virtually zero to encourage lending and economic recovery.
Economy minister Hiroko Ota reassured Wednesday that the economy likely won't stall, while acknowledging a need to monitor consumption, wages and employment.
"We think that the sluggish consumption is a result of weak income growth," she said. "The reason for that and how long it will continue is unclear."