TOKYO By Ryotaro Nakamaru
Japan’s economy is likely to be experiencing its longest expansion phase since the end of World War II amid solid domestic demand and a tightening labor market, the government said Tuesday.
The world’s third-largest economy is thought to have counted its 74th consecutive month of improvement since December 2012 under Prime Minister Shinzo Abe, though there is persistent criticism that consumers have yet to feel the benefits as wage gains remain tepid.
In the January edition of its monthly economic report, the Cabinet Office kept its headline assessment that the economy is “recovering at a moderate pace.”
Toshimitsu Motegi, minister for economic and fiscal policy, told a Cabinet meeting the economy has likely surpassed the previous longest expansion between February 2002 and February 2008, also known as the Izanami Boom, named after a goddess in Japanese mythology.
In roughly a year from now after conducting a comprehensive review of more data, a government panel will formally decide whether the boom has indeed extended the record.
Robust exports and business investment have been the main drivers of growth under Abe’s economic policies focusing on drastic monetary easing and fiscal spending.
His Liberal Democratic Party will seek to tout the success of “Abenomics” ahead of local elections in April and upper house elections in the summer.
But gross domestic product has grown a real 1.2 percent on average during the current expansionary phase, lower than 1.6 percent during the previous boom. Private consumption remains on a weak note as wage increases remain slow despite companies chalking up record-high profits.
In a morning press conference, Motegi, who belongs to the LDP, was quick to point out that the economy had added 3.75 million jobs in that time, nearly four times as many as during the Izanami Boom and approaching that of the asset bubble economy of the late 1980s and early 90s.
The government will implement policy measures to “extend the current expansion and make the benefits felt more strongly,” he said.
Despite the record-setting implications, the Cabinet Office report was somewhat downbeat on the economy, saying exports are “in a weak tone” as demand from the rest of Asia for technology products waned.
It also warned of risks abroad including heightened trade tensions between the United States and China and a slowdown in the Chinese economy.
The office maintained its assessments of other key elements of the economy, saying private consumption is “picking up” and business investment is “increasing.”
But it also said that inflation is “flat,” a more dovish reading than in December when it said it had been “rising at a slower tempo.”
Year-on-year gains in core consumer prices, excluding volatile fresh food items, have slowed to 0.7 percent despite the Bank of Japan’s efforts to hit 2 percent inflation.