Japan's precarious comeback trail

Strong export business keeps things on track, but there are warning signs for the Asian power...

Japan's precarious comeback trail

Picture by Susan Walsh AP/Press Association Images

Japan closed out 2016 with its fourth quarter of economic growth in a row, as a strong export performance kept the Asian power's minor key comeback on track.

Growth of an annualised 1% for the October-December period, which was roughly in line with the predicted 1.1%, following the revised 1.4% expansion between July and September.

It was what was leaving the world's third largest economy that made for a relatively positive picture, with exports enjoying a rise of 2.6% thanks to a weakened yen, the fastest growth in two years. Shipments of cars to China and the US, electronics to Asia, accounted for much of the increase.

At home, there was cause for concern. Private consumption showed no growth, with consumers exercising caution and increases in the price of fresh food hitting households' purchasing power. 

To put that problem in perspective, private consumption accounts for approximately 60% of Japan's GDP.

Japanese economic growth slowed sharply in the final three months of 2016, according to data released by the government on Monday. 

Even Japan's trade is facing an uncertain future, as its persistent surplus with the US could place the country in the firing line as Donald Trump's administration continues to follow a protectionist agenda. 

Akie Abe, wife of Japanese Prime Minister Shinzo Abe, left, and US first lady Melania Trump, centre, tour Morikami Meseum and Japanese Gardens in Delray Beach, Fla. (AP Photo/Terry Renna)

Japanese Prime Minister Shinzo Abe joined Trump in Washington DC and Florida over the weekend, where – awkward handshake aside – he was met with a far more agreeable presence than he might have expected had he seen tweets such as the below in the past.

Despite Trump's softened attitude to Japan for the duration of the trip, Reuters reports that analysts do not expect it to last. 

Although Japan's economy minister Nobuteru Ishihara said the country is in a moderate recovery trend with positive momentum expected to be maintained, he also sounded a cautious note.

Far more positive in the long term is Geopolitical Futures, which predicted this month that Japan will emerge as East Asia's economic superpower over the next quarter of a century, leading China by 2040.

It cites the relatively even distribution of Japaneses wealth as a key reason why, compared to the major problem of poverty still facing China. Geopolitical Futures believes the main problem facing the land of the Rising Sun is its dependence on imports for food and raw materials.