The Japanese economy limped out of recession in the final three months of last year, official data showed today, but growth was flat for 2014 and the weaker-than-expected figures were likely to boost calls for more central bank stimulus.
The tepid results come after the world’s number-three economy contracted between July and September—the second consecutive quarterly decline—as consumer spending dropped sharply following an April sales tax rise aimed at shrinking Japan’s massive national debt.
But the country has since been seeing signs of a modest recovery—including an uptick in factory output and a tight labour market. Economists had widely expected a 0.9 per cent expansion between October and December.
The government figures showed a weaker-than-expected 0.6 per cent growth rate in the three months to December, or 2.2 per cent on an annualised basis.
Over the full year, the preliminary data showed a flat 0.0 per cent growth rate for 2014, after a 1.6 per cent expansion in 2013. Revised figures will be released in the following weeks.
By contrast, the US economy grew at its fastest pace in four years in 2014, expanding at an annualised rate of 2.4 per cent.
“While Japan’s economy has finally left the tax-related weakness behind, the increase in Q4 GDP fell short of expectations and supports our view that the Bank of Japan will announce more stimulus in April,” Marcel Thieliant from Capital Economics said a note after the figures were released.
“Today’s result indicates that the Bank of Japan’s view on growth is too optimistic, and we still believe that the Bank will announce more easing at the late-April meeting.”
Last month, Japan’s central bank slashed its inflation outlook as plunging oil prices dent efforts to slay years of deflation. But policymakers still boosted their growth forecasts, saying the economy would expand by 2.1 per cent in the fiscal year to March 2016, up from an earlier 1.5 per cent forecast.