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Despite a boom in private and public spending, the slow rise in Japan’s economy brings the country’s total increase in GDP to 1.6 per cent from a 1.4 per cent increase by the end of 2012, as the world’s third largest economy emerged from recession.
Private spending rose 0.5 per cent from the previous quarter, according to the published data. Economists and experts have attributed that increase to a planned hike in the country’s sales tax, to be put into effect on April 1.
The Bank of Japan, whose monthly monetary policy meetings began on Monday, had promised ahead of the data’s release to leave their current policies untouched, vowing only to intervene if the planned sales tax increase upsets the balances for individual and corporate consumers.
Experts said they expect the central bank to retain its policies at least temporarily, but anticipated expenditure to diminish between April and June 2014.
The government has pledged a 5.5 trillion Yen ($54.2 billion) spending policy to help stimulate the market and encourage further corporate confidence and investment.
Prime Minister Shinzo Abe, who came to power a year ago, declared an aggressive plan to stimulate the market, starting with weakening his currency to encourage exports.
But the purposeful devaluation of the Japanese Yen had an almost adverse effect. The export market rose only by 0.5 per cent, while imports jumped up by 3.4 per cent, mainly due to a slow growth in other Asian markets.
During the January-June period, imports grew by 9. 2 per cent on year to 38,801.2 billion yen ($389.147 billion) while exports rose 4.2 per cent to 33,957.4 billion yen ($340.5 billion) – a trade deficit of 4.8 trillion yen ($48 billion).
Economists say some of the deficit is due to the 2011 Fukushima nuclear crisis which forced the country to turn from nuclear power to more expensive fossil-fuel alternatives; some 90 per cent of Japan’s energy supplies come from imports.
Japan’s debt surged into record figures toward the end of 2013, totaling up to at least double the nation’s total GDP in 2012, according to the Finance Ministry. The statement said it expected the debt to go up to 1,1071 trillion yen ($11.28 trillion) from 1,011.2 trillion yen (about $10.3 trillion).
The government plans to continue its efforts to boost the Japanese market, despite analysts’ doubts that the country will mend its financial dilemma in the near future.