-Taro Saito, director of economic research at NLI Research Institute
Japan has recovered from recession triggered by sales tax hike in April last year. The world's third biggest economy grew 2.2% in the fourth quarter, though weaker than the expected 3.7% expansion, as household and corporate spending disappointed. On a quarterly basis, Japan's GDP rose 0.6% in the reported period after falling 0.5% and 1.8%, respectively in the previous two quarters. Following the data release Economic Minister Akira Amari said the nation's economy was set for a recovery with signs consumer sentiment is improving. The recovery from recession will allow the Bank of Japan to hold off on expanding monetary stimulus for some time even as plunging oil prices push inflation further away from the central bank's 2% goal. One of the biggest headwinds for Japan is a deteriorating global economic outlook, which has caused a wave of monetary easings around the world to combat deflationary threat and underpin growth. However, there is a number of tailwinds, which will help boost Japan's economy. A weaker Yen has started to support domestic manufacturing by increasing the demand for exports from Japan. Tourism is also booming, as once expensive Japanese cities begin to look cheap and attractive to travellers from countries with stronger currencies.
Japan's economy slid into recession in July-September last year, prompting Abe to delay a second sales tax hike initially planned in October 2015.
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