We like to imagine Japan as a stagnant, long-term dying economy, but for the time being at least have to point out that the nation is currently growing faster than the U.S..
1Q GDP growth missed analyst expectations, coming in at +4.9% on an annualized basis vs. 5.5% expected, but it was higher than America’s 1Q GDP growth of 3.2%.
One reason for Japan’s faster current rebound is that the Japanese economy fell much harder than that of the U.S., at one point dropping at a 13.7% annualized rate as shown below.
The other reason is that Japan has become a play on Asian economic development, rather than a play on its own economy.
Private consumption, which makes up about 60 per cent of the economy, grew 0.3 per cent in the quarter, while exports rose 6.9 per cent. Economic recovery in Japan has been bolstered by a rebound in Tokyo’s mainstay exports of cars and electronics, which posted the fourth year-on-year rise in March. The rebound finally appears to be filtering through to domestic production and wages.
While this was the first quarter since 2004 that all domestic demand components of the GDP data grew, growth was still anemic. Japan’s economy is still dying at home, it’s just that international demand is providing life support.