Abenomics describes the plans of Japanese Prime Minister Shinzo Abe to revive growth in the world’s third largest economy, which is struggling to find traction under the impact of a strong yen and stubborn deflation.
Japan economy expands 1.6 per cent in 2013, but growth slows in last quarter
Japan's economy logged its best performance in three years as Prime Minister Shinzo Abe's growth blitz drove the expansion, but weak second-half data and a sales tax rise scheduled for April are expected to dampen hopes for a firm recovery.
The 1.6 per cent expansion last year marked the first annual figures under Abe and his policy blitz dubbed Abenomics, after the conservative swept national elections on a ticket to restore Japan's fading status as an economic superpower.
Abe's government was likely to champion the figures published yesterday as proof that the drive to stoke growth and conquer years of deflation was taking hold.
Since Abe swept to office in late 2012, the yen lost about a quarter of its value against the US dollar, giving a boost to Japanese exporters, while the Nikkei-225 Index soared 57 per cent last year to post its best performance in more than four decades.
But critics fear a tax rise in April, crucial for chopping Japan's massive national debt, will curtail the budding recovery.
The sales tax is set to increase to 8 per cent from 5 per cent, the first rise since the late 1990s.
The annual figures published yesterday only modestly beat Japan's expansion in 2012 before Abe came to power, and weaker-than-expected second-half data was likely to stoke more concerns about keeping up the pace of growth as consumers get set for the tax rise.
Consumer and corporate spending in the latter half of the year failed to take off, pointing to a still-cautious mood in households and businesses.
"Weak [fourth-quarter gross domestic product] figures show the surge in spending ahead of the tax [rise] has yet to come," Capital Economics said.
The figures showed that, after leading Group of Seven countries in the first half of the year, Japan's economy expanded just 0.3 per cent in the fourth quarter, less than the 0.7 per cent economists had expected, a survey by the Nikkei business daily showed.
Yoshiki Shinke, the chief economist at Dai-ichi Life Research Institute, said the weak figures were largely a result of lacklustre exports.