Japan’s economy recovers, averts recession

May 18, 2016, 7:13 AM EDT
Tokyo stock exchange
(Source: Jacob Ehnmark/flickr)

Bolstered by strong private consumption and exports, Japan’s economy grew at a better-than-expected pace, with an annualized G.D.P. of 1.7 percent in the first quarter of the year.

Despite this performance, however, Japan’s policymakers face a tough task ahead to keep the country’s economy on track, given the volatility of growth and contraction suffered in the previous four quarters.

Earlier in the year, the Bank of Japan introduced negative interest rates in the bid to push economic growth, writes the BBC. An extra day in the leap year 2016 also played a role in Japan’s economic recovery, opined a few experts.

Analysts were expecting a second straight contraction that would have thrown the country into recession, but a 0.5 percent rise in household expenditure averted the downslide, notes The New York Times.

As Japan’s economy registered a modest recovery, the country’s economy minister Nobuteru Ishihara said the government would insulate the economy from “volatile markets and weak demand in emerging countries” by means of a “flexible policy response.”

The latest figures will also influence Prime Minister Shinzō Abe’s decision about a possible tax hike, said government officials.

In a desperate attempt to stimulate Japan’s economy, the government introduced a slew of reforms in 2012, which didn’t meet the expectations of Abe’s supporters.