JAPAN’S economy grew for a fourth straight quarter in the final three months of last year thanks to strong exports, though weak private consumption and rising protectionism in the United States suggested a sustainable recovery could be some way off.

    Cabinet Office data yesterday showed the world’s third-largest economy grew an annualized 1 percent in the September-December period, roughly in line with the 1.1 percent increase markets had expected, following a revised 1.4 percent expansion in the July-September period.

    The data should be a relief to government and Bank of Japan (BOJ) policymakers who aim to sustain growth and pull the economy out of deflation and stagnation. However, uncertainty over U.S. President Donald Trump’s policies has cast a cloud over the export-reliant economy as domestic demand remains underpowered, analysts say.

    Trump’s protectionist policies, which have rattled global markets and regional economies reliant on the vast U.S. market, have kept investors guessing about the outlook for world trade, investment and growth.

    Economy Minister Nobuteru Ishihara said Japan remained in a moderate recovery trend and expected the positive momentum to be maintained.

    “However, attention should be paid to uncertainty over global economy and fluctuations in financial markets,” he told reporters after the data release.

    Analysts were equally cautious about the outlook even as a weak yen has provided exports a lift.

    “The fact that the economy grew a fourth straight quarter on the back of exports should be considered a passing mark for policymakers,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

    “Still, the corporate sector strength has not spread to households who are facing higher costs of living and future uncertainty. The key is how price-adjusted real wages grow to support private consumption from now on.”

    The preliminary reading for fourth-quarter gross domestic product (GDP) figure translated into 0.2 percent growth on a quarter-on-quarter basis, versus a 0.3 percent gain expected by analysts.

    External demand, or exports minus imports, contributed 0.2 percentage point to GDP, due to a rise in shipments from a pick-up in car demand from China and the United States, and electronics parts from Asia.

    Private consumption, which accounts for roughly 60 percent of GDP, showed no growth, largely in line with a flat reading forecast by economists. Rising prices of fresh food and vegetables are likely to have dented households’ purchasing power.

    Underlining a struggle to accelerate inflation to the BOJ’s 2 percent target, GDP deflator, a broad gauge of prices, fell 0.1 percent in the October-December period from the same period a year earlier, down for a second straight quarter of declines.

    Housing investment, a bright spot in the economy thanks to the central bank’s aggressive monetary easing, rose 0.2 percent, the slowest expansion in four quarters.

    On the upside, capital expenditure, a key component of GDP, rose 0.9 percent, reversing from a 0.3 percent decline in the third quarter.

    Just the same, some economists saw risks stemming from weak domestic demand as well as trade protectionism.

    “I expect growth to accelerate this year on an upswing in global demand. One risk is consumption. Real wages might remain weak,” said Daiju Aoki, senior economist at UBS Securities.

    “One problem with protectionism is companies could hesitate because they will not know when and where to invest. This could lead to a delay in investment.” (SD-Agencies)