Japan exits recession amid growth data concerns

JAPAN came out of recession in the fourth quarter of last year, but the world’s third largest economy grew at a slower than expected pace.

The economy expanded by an annualised 2.2% in the three months to December in a preliminary reading, compared to forecasts for a 3.7% increase.

Japan’s growth in the fourth quarter comes after the economy contracted for the two previous quarters.

Japan has been recovering from a sales tax hike, which dampened spending.

The economy grew 0.6% in the period from the previous quarter, but that also fell below forecasts of 0.9% growth.

The data showed a fragile recovery in the country where consumer sentiment remains soft even after Prime Minister Shinzo Abe delayed a second increase to the sales tax that was scheduled for October this year.

Private consumption, which accounts for about 60% of the economy, increased 0.3% in the fourth quarter, less than the 0.7% rise expected by economists.

Glenn Levine, senior economist at Moody’s Analytics said exports “added solidly” to economic growth, accounting for about half of the expansion, while the rest of the economy remained relatively subdued.

Exports rose 2.7% in the fourth quarter compared to the third quarter, while imports were up 1.3%.