Growing tourism statistics play major part in eight straight quarters of economic growth

Japan in February recorded an eighth consecutive quarter of economic growth – its best performance since the heady days of 1989 and the era of the nation’s economic bubble – although the pace of expansion has been slowing.

Nevertheless, citing favourable external demand and climbing private investment, the International Monetary Fund expects Japan’s economy to grow around 1.2 per cent over the course of 2018 and a respectable 0.9 per cent in 2019.

“In truth, the economy has been growing by about double the rate of its potential growth in large part thanks to the effects of ‘Abenomics’,” says Martin Schulz, senior economist with the Fujitsu Research Institute in Tokyo. “While that growth will cool later next year, I would characterise this as normalisation of the growth rather than a contraction.”

The initial push caused by Prime Minister Shinzo Abe’s ambitious economic blueprint, introduced shortly after he assumed the post in December 2012, was the result of monetary policies helping to drive asset and real estate prices.

That has not translated into broader spending by the Japanese public, who remain reluctant to splash out at a time when wage growth has been stagnant and there were residual fears of another global economic crisis, such as the chaos in the aftermath of the collapse of Lehman Brothers in 2008, or a significant event closer to home, like the 2011 earthquake that hit northeast Japan.

Yet, there are several pluses for an economy that continues to bask in the glow of an extended positive business cycle. Government statistics put unemployment at a mere 2.8 per cent in April, the lowest figure since 1994, while record numbers of graduates are walking straight into employment.

Tokyo is also introducing sweeping reforms to the nation’s working habits, forcing companies to limit their employees’ overtime and encouraging firms to increase efficiency and productivity.