As many countries around the world, Japan suffered a recession following the downturn of the US economy in 2008. While some economists and financial experts had expressed concerns about Japan's ability to successfully emerge from its stalled economic condition, a report by the nation's statistics agency indicates that the country's upward trend accelerated unexpectedly in the first quarter of 2015.
According to a story in the New York Times, Japan's economy expanded at an annualized rate of 2.4 percent during the months of January, February, and March 2015. Many had grown concerned about the stability of the Japanese economy after a sudden, but brief downturn in mid-2014. Fortunately, that trend appears to have reversed itself, as this growth represents the second quarter of an upward track for the nation.
While most experts expected modest growth to start 2015, about 1.5 percent, the 2.4 percent rate reported surprised many in the financial world. The surge appears to stem from surprisingly robust spending on homes and home renovations. The expansion could be just the lift that Prime Minister Shinzo Abe needs in order to convince the public of the merits of his economic stimulus package dubbed "Abenomics."
Abe's program involved vast injections of cash into the economy by the central bank. This has fattened the profits of several corporations and boosted stocks, but many ordinary Japanese citizens have yet to feel the benefits from this program. Many have compared the Japanese recovery to that in the United States, particularly in light of the fall in unemployment without a corresponding rise in wages.
Japan boasts an unemployment rate of just 3.4 percent, but almost 40 percent of the Japanese population work in part time or temporary positions. As a result, these workers earn only about two-thirds the salary of a full time employee. Companies prefer part time and contract employees because of Japan's unique custom of lifetime employment commitments to permanent staff.
Although Abe has been applying pressure to employers to raise salaries, change has been slow. Thus, while the expansion is good news, some experts caution that it may not be sustainable because the benefits of the expansion and underlying economic programs have disproportionately benefited an elite minority.
Growth at the end of 2014 was 1.4 percent. Obviously, a spike of a full percentage point is encouraging, but only time will tell if the "Abenomics" plan can continue to sustain such growth long enough to fully lift Japan out of its recession.