Japan’s growth rate over this year’s first quarter was revised up to 1 percent yesterday, at an annualized rate of 4.1 percent. This is remarkable news for a country that has struggled to post strong economic growth in recent years. Compare the annualized rate of 4.1 percent to the expected rate of just 3.5 percent, and you’ll understand why the Nikkei 225 index closed up 4.9 percent. Prime Minister Abe, who promised in his campaign to turn the country’s economic fortune around, is a big winner here. The FT reports:
[Prime Minister Abe] swept to victory in last December’s lower-house election amid widespread disenchantment with the then-ruling party, the Democratic Party of Japan.Mr Abe has since unleashed two of his three “arrows” of economic revitalisation—a Y10.3tn ($105bn) fiscal stimulus package in January, and a new regime at the central bank—and will finalise his third, the longer-term growth strategy, on Friday.
This is one of the most important stories going on today. Can the world’s third-largest economy end 30 years of stagnation and start moving again? There are huge implications here for world prosperity and Asian geopolitics. So far this year, Japan has outperformed France, Germany, Italy, Canada, the US, and the UK—the G-7.But the big question remains: Abe speaks of three arrows of revitalization. It’s the third arrow, making Japan’s economy more dynamic over the long term, that matters most. Important announcements about the long term strategy are expected this week. The world will be watching.[Update: fixed errors made in Japan’s Q1 and annualized growth rates]