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Japan's economy expands

February 17, 2014

Japan's economy has posted its best performance in three years, with growth figures for 2013 indicating that Abenomics is gaining traction. But this year's outlook appeared mixed, with a sales tax hike looming in April.

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Toyota facility in Japan
Image: picture-alliance/dpa

Japan logged 1.6 percent growth in 2013, the national statistics agency reported on Monday. It presented the first annual figures within the Abenomics period, named after the stimulus scheme by the prime minister.

Shinzo Abe's government hailed the expansion as proof that endeavors to fuel growth and conquer years of deflation were taking hold.

"The economic trend is pointing upwards, led by private-sector demand," Economy Minister Akira Amari told reporters.

Not yet out of the woods

Abe had been calling on firms to raise wages considerably so as to also stoke consumer spending. Households had been paying more for everyday goods, but Abe's efforts to leave consumers with more to spend have had little effect so far.

An added irritation is a planned sales tax hike in April which might nip this year's GDP expansion in the bud.

Abenomics getting mixed reviews after one year

"Last-minute spending to avoid the higher sales tax will likely lead to an acceleration in demand in the first quarter," Capital Economics commented. "But this will be followed by a slump in the second quarter."

hg/mkg (Reuters, AFP, dpa)