Japan pulls out of recession, but economic growth disappoints

Although Japan emerged from a brief recession, its economic growth in the fourth quarter was below forecasts

Japan emerged from a brief recession in the fourth quarter, but growth was less than forecast, signaling continued problems for the nation's long-struggling economy.

The government reported Monday that total economic output, or gross domestic product, expanded at a 2.2% annual rate from October through December.

It was the first growth since early last year, though economists had expected a stronger bounce-back of about 3.6% annual growth.

Japan is struggling along with many of the world's top economies, aside from the U.S., which poses trouble for American exporters.

The more robust U.S. economy has caused the value of the dollar to soar against the yen and other currencies, making American products more expensive to purchase overseas.

A sharp hike in Japan's sales tax in April, which was meant to reduce the nation's huge public debt, caused a steep drop in consumer spending that pushed the country into its fourth recession since the 2008 financial crisis.

A recession is two consecutive quarters of economic contraction.

Japan's economy contracted at a 6.7% annual rate in last year’s second quarter, followed by a 2.3% contraction in the third quarter.

The recession was a blow to Prime Minister Shinzo Abe's plan — dubbed Abenonmics — to turn the nation's economy around after decades of stagnation and deflation.

Economists expected a brief recession, and that was confirmed as the economy returned to growth in the fourth quarter.

But there were troubling signs in the government's report.

Consumer spending increased just 0.3% from the previous quarter. Capital spending by Japanese businesses rose 0.1% in fourth quarter.

Exports jumped 2.7% as the weak yen has made Japanese products cheaper to foreigners.

Last month, the Bank of Japan said it would take more aggressive action to try to boost prices and reverse a long period of deflation.

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