Tokyo (AFP) - Japan's economy has logged its best performance in three years, driven by Premier Shinzo Abe's growth blitz, but weak second-half growth and an April sales tax rise are denting hopes for a sizzling 2014.
The 1.6 percent expansion last year marked the first annual figures under Abe and his programme, dubbed Abenomics, after the conservative swept national elections on a ticket to restore Japan's fading status as an economic superpower.
Tokyo championed the figures published Monday as proof that the drive to stoke growth and conquer years of deflation was taking hold.
"Domestic demand remains in a good shape," economy minister Akira Amari told reporters Monday, adding that the "economic trend is pointing upward, led by private-sector demand".
Since Abe swept to office in late 2012, the yen lost about a quarter of its value against the dollar -- giving a boost to Japanese exporters -- while the Nikkei stock index soared 57 percent in 2013 to post its best performance in over four decades.
But critics fear that a tax rise in April -- seen as crucial for chopping Japan's eye-watering national debt -- would curtail the recovery. Rates are set to increase to 8.0 percent from 5.0 percent, Japan's first sales tax rise since the late nineties.
Abe has been calling on firms to hike wages as consumers face paying more for everyday goods, while Tokyo launches a special $50 billion stimulus package to prop up the post-tax rise economy.
Spring labour negotiations would likely generate widespread wage hikes, Abe said Monday, although there has so far been little evidence of big pay or capital spending rises, seen as key to concrete growth, after years of lacklustre consumer demand.
"We expect that a trend of rising salaries will expand more than last year," Abe told parliament.
Despite Tokyo's upbeat take on the annual growth figures, they only modestly beat Japan's expansion in 2012 before Abe came to power, and weakening second half data was likely to stoke more concerns about the pace of recovery.
Consumer and corporate spending in the latter half of the year failed to take off, pointing to a still-cautious mood among households and in the country's boardrooms.
"Weak Q4 GDP figures show that the surge in spending ahead of the consumption tax hike has yet to come," Capital Economics said.
"Last-minute spending to avoid the higher sales tax will likely lead to an acceleration in demand in (the first quarter), followed by a slump in the second quarter."
- Lacklustre exports -
Japan economy grows in 2013, but concerns loom
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Monday, 17 Feb 2014