What Drove the Growth?
The economic expansion came mostly from abroad.
After unusually exuberant spending by Japanese consumers in the April to June period, foreign trade took over as the main engine of growth from July through September. Exports have been central to Japan’s recovery, helped in part by a weak yen.
The government’s stimulus program, colloquially known as Abenomics after the prime minister, calls for the central bank to inject vast amounts of money into the financial system. That weakens the yen, making Japanese cars, electronics and other products more attractive to foreign buyers.
The domestic side of the economy was weaker. While exports increased 6 percent in annualized terms, household consumption fell 1.9 percent, the data showed. Business investment was more robust, expanding 1 percent — a sign that companies expect Japan’s growth streak to last awhile longer.
Is Deflation Dead?
Consumer prices have been declining in Japan since the 1990s, a debilitating cycle known as deflation that can lead consumers and companies to put off purchases or investments, hitting economic growth and leading to a vicious cycle where prices continue to fall. That has squeezed companies’ revenues, leaving them with less money to pay workers.
Ending deflation is the ultimate goal of Abenomics. After lurching between rises and falls for about five years, consumer prices have been rising steadily, if modestly, this year. Though inflation — now at 0.7 percent by the Bank of Japan’s preferred “core” measure — remains at less than half the target of 2 percent, some analysts say they think the government may soon declare an official end to the two-decade deflationary scourge.
In Monday’s data, the G.D.P. deflator — one of several measures of price trends — turned positive in the third quarter, another sign that deflationary pressure in the economy has eased.