Japanese growth spurt set to subside

Tim Wallace
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A BOOM in Japan’s economy from July to September has taken GDP to levels higher than those seen before the earthquake and tsunami in March.

However, many economists believe the growth spurt was largely a rebound from March’s disaster.

The economy expanded by 1.5 per cent in the third quarter, according to official figures.

Domestic demand rose by one per cent, while rapid repairs to supply chains allowed a 6.3 per cent rebound in exports in the third quarter as exports exceeded imports, reversing the position in the second quarter.

Such a strong third quarter followed a 0.5 per cent contraction in the previous three months, and represents the first growth in a year.

“Stripping away the ‘catch up’ and temporary elements of the third quarter data casts doubt on the sustainability of growth into 2012,” said Michael Taylor, an economist at Lombard Street Research.

“We expect recession early in 2012 in the US and the Eurozone, and the economy in China, Japan’s biggest trading partner, will be slowing too. Industrial output and exports will struggle to make further headway against a very weak global backdrop.”