Japan’s economic growth picks up in third quarter

JAPAN’S economic growth accelerated in the third quarter as expiring government incentives gave consumption a last-minute boost before a long-anticipated slowdown that analysts say is already under way.

Indeed, many expect the economy to stall or even contract slightly in the next two quarters as the strong yen’s damage to exports becomes more evident and factory output slumps after incentives for buyers of low-emission cars expired in September.

Japan’s GDP grew 0.9 per cent in July to September from the previous quarter, accelerating from a 0.4 per cent rise in the second quarter and beating a median forecast for a 0.6 per cent rise, official data showed on yesterday.

While few expect Japan to slip back into recession, policymakers remain alert to risks to the fragile economy.

The yen was trading below its 15-year peak yesterday, but its renewed climb toward record highs could prompt the Bank of Japan to ease monetary policy further by spending more on government bonds and other assets to avoid a prolonged downturn.