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Last Updated: Friday, 17 February 2006, 10:27 GMT
Japanese economy picks up speed
Japanese car plant
Japan's exports continue to grow
Japan's economy grew at a faster pace than expected in the final three months of 2005, boosted by a pick-up in exports, official figures show.

Gross domestic product rose by 1.4% during the fourth quarter, topping market forecasts for a figure of 1.2%.

On an annualised basis, the world's second-biggest economy grew by 5.5%, the Cabinet Office reported.

The upbeat GDP data provided the latest indicator pointing to a sustained recovery for the Japanese economy.

Booming demand

It's a clear stamp of confirmation that the economy is growing very strongly
Stefan Worrall, Credit Suisse economist

A key business survey on Thursday revealed that confidence among Japan's manufacturers was continuing to grow.

Earlier in the week, the government reported that Japan's current account surplus - the difference between the export and import of goods and services - rose in December for the fourth straight month.

The strong GDP data will add to expectations that Japan's central bank will shift its policy of keeping interest rates close to zero per cent.

Japan has been struggling against falling consumer prices, which encourage shoppers to put off spending whilst swelling the real value of companies' debt.

But a recent jump in domestic demand, along with fresh figures showing that exports to Japan's main markets in China and the US rebounded, has helped turn the economy around.

"It's a clear stamp of confirmation that the economy is growing very strongly," said economist Stefan Worrall at Credit Suisse.

"Although in certain areas, consumption perhaps, we might see some take-back in the first quarter, definitely the economy is driving on all cylinders."

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