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Japan’s economy has emerged from recession in the fourth quarter of 2014, according to official data released on Monday, but the recovery was at a pace well below expectations as the economy continues to struggle to gain momentum.
The figures show that the economy, under the stewardship of Prime Minister Shinzo Abe, grew at an annualised pace of 2.2% in the fourth quarter of 2014 but quarter-on-quarter growth of 0.6% compared weakly with economists’ forecasts of 0.9%.

The figures may suggest that Japan’s economy is back on track after falling into a technical recession in the middle of last year, but with demand growth modest, it will be hard to reach the Bank of Japan’s goal of permanently ending deflation.

Growth was driven by private consumption, which rose 0.3% on the previous quarter, contributing
0.2% to growth; and exports, which rose 2.7%, was driven by the weaker yen.

With imports also rising by 1.3%, net trade as a whole contributed only 0.2% to total growth, highlighting how Japan’s trade account has become less sensitive to a weak yen.

Japan’s government is currently in the middle of an unprecedented stimulus – known as Abenomics after the country’s Prime Minister – aimed at reviving the country’s economy after two decades of malaise. However, growth stuttered badly after Abe raised consumption tax from 5 to 8% last April, as part of an effort to tackle Japan’s huge budget deficit.

The economy shrank in the second and third quarters of 2014. Meanwhile, private consumption fell more than 5% in the second quarter of last year, and has yet to recover.

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