Japan’s economy narrowly avoids recession as growth figures revised

Japan’s economy has narrowly avoided recession, underscoring the economic challenges facing the East Asian giant even as its stock market is cruising at its highest levels in decades.

Gross domestic product (GDP) grew an annualised 0.4 percent between October and December, up from earlier provisional data that showed a 0.4 percent contraction, Japan’s Cabinet Office said on Monday.

On a quarterly basis, GDP expanded 0.1 percent, revised up from an estimated 0.1 percent decline.

Japan’s government last month announced provisional figures showing that the economy had unexpectedly slipped into recession amid sluggish domestic demand and private consumption.

While the revised figures mean that Japan escaped recession – defined as two consecutive quarters of negative growth – it continues to be the world’s fourth-largest economy after losing the number three spot to Germany.

The improved figures are likely to boost expectations that the Bank of Japan may end its unconventional policy of negative interest rates, introduced nearly a decade ago, as soon as this month.

Japan’s economy has struggled with meagre growth throughout several “lost decades” following the collapse of a massive asset bubble in the early 1990s.

Despite the Japanese economy’s struggles, Tokyo’s stock market is riding high as foreign investors take advantage of the cheap yen and corporate governance reforms that have boosted returns for shareholders.

The benchmark Nikkei 225 index earlier this month smashed the 40,000 mark for the first time, after surpassing its 1989 peak in February.