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Last Updated: Friday, 14 November, 2003, 06:10 GMT
Exports underpin growth in Japan
Businessmen walk past a board showing stock prices in Tokyo
Japanese firms are benefiting from strong export demand
Japan's much-battered economy has grown for the seventh quarter in a row thanks to continued demand for Japanese goods in China and the US.

For the three months to September, GDP was up 0.6% from the previous quarter, making an annual rate of 2.2%.

Economists said that domestic spending was also climbing, albeit at a slower rate than the impact of overseas trade.

The data will be good news for Prime Minister Junichiro Koizumi, re-elected last week with a shrunken majority.

"It's stronger than we thought it would be," Mr Koizumi told reporters.

His party's disappointing performance in Sunday's poll has widely been seen as a response to dissatisfaction with the slow pace of economic reform and of Japan's recovery from four recessions in little more than a decade.

Help from abroad

The spurt, the government's data showed, was largely a response to continued expansion in the US and China, both of whom are major buyers of Japanese goods.

Exports contributed a third of the growth, and economists said they believed the trend was set to stay for the next few months at least.

"With the US economy seen growing strongly, Japan's exports are likely to grow at a stable pace," said Ryota Sakagami, economist at Nomura Research Institute in Tokyo.

Domestic demand was less impressive, but business investment - which recent surveys have indicated is picking up - was doing better than some had feared, with spending on electronics, communications and automobiles showing healthy gains.

Lacklustre

The growth news failed to produce much of a market reaction, with the benchmark Nikkei 225 falling 1.65% by the close.

Apart from anything else, the pickup in Japan - while reassuring - still leaves the country reliant on foreign countries whose own growth is far outstripping its own.

China, for example, could grow as much as 9% this year, and its currency is pegged at a low level against the dollar, making its own exports more competitive.

As for the US, the third quarter produced expansion that - if continued for a year - would amount to 7.2%, and the dollar itself is continuing to lose ground to a resurgent yen.

That has already hit the results and share prices of some Japanese exporters, including games company Nintendo.


MARKET DATA - 11:37 UK

FTSE 100
5428.78up
22.84 0.42%
Dax
5732.06up
18.55 0.32%
Cac 40
3783.91up
14.37 0.38%
Dow Jones
10403.79up
78.53 0.76%
Nasdaq
2273.57up
35.31 1.58%
Data delayed by at least 15 minutes

SEE ALSO:
Japan PM upbeat on poll results
10 Nov 03  |  Asia-Pacific
Economy dominates Japan poll
07 Nov 03  |  Business
Fresh optimism for Japan shares
04 Nov 03  |  Business
Japan strives for weaker yen
02 Oct 03  |  Business
Profile: Japan's economic champions
22 Sep 03  |  Business
Japan reshuffle targets economy
22 Sep 03  |  Business


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