Japan’s economy showes strong growth

TOKYO – Japan’s economy gained momentum in the third quarter, growing at an annualized pace of 3.9 percent, as the final stretch in government stimulus gave private consumption a last-minute lift. Still, economists warned of an imminent slowdown as a strong yen, faltering exports and the end of generous government incentives on fuel-efficient cars pinch company earnings. Deflation or the debilitating and widespread decline in prices, has also weighed on Japan’s recovery from its worst recession since World War II.The new figures showed that gross domestic product expanded 0.9 percent in the three months to September from the previous quarter -- Japan’s fourth consecutive quarter of growth -- accelerating from a 0.4 percent gain in the second quarter and beating a median forecast for a 0.6 percent rise.The expansion translated to an annualized gain of 3.9 percent, topping the annualized expansion of 2 percent in the United States in the same quarter. Private consumption, which accounts for about 60 percent of the economy, increased 1.1 percent, helped by government incentives on the purchase of fuel efficient cars and energy-saving appliances. Those incentives ended in September. But in a sign of slowing demand overseas, net exports made no contribution to growth in the July-September quarter. More recent economic data, including sluggish capital expenditure numbers, have pointed to a slowdown in Japan’s economy, the world’s third largest, after those of the United States and China. The yen’s surge this year to 15-year highs, and an economic slowdown in China, Japan’s largest trading partner, also poses risks to Japan’s economic outlook, economists say. Recovery in Japan’s labor market has been lackluster, with the unemployment rate at 5 percent. Though low by international standards, the unemployment rate masks the rise of temporary and low-paying jobs, especially among women. Last month, Japan’s central bank last month eased its already-loose monetary policy in a bid to shore up the country’s faltering recovery, lowering its benchmark interest rate to a range of 0 percent to 0.1 percent and setting up a fund of 5 trillion to buy Japanese government bonds, commercial paper and other securities. Meanwhile, Japanese Prime Minister Naoto Kan has pledged to bolster economic growth by opening up Japan’s markets, saying Tokyo should join a United States-backed free trade initiative that spans the Pacific Rim. But Mr. Kan’s plan faces staunch opposition from Japan’s farmers, who fear losing the protection of the country’s high tariffs against agricultural imports. On Sunday, Japan joined other leaders at the Asia-Pacific Economic Cooperation summit in committing to take steps to form a region-wide free trade zone.