Business

Japan's Economy Grows for Longest Stretch in 28 Years

Skyscrapers in Tokyo’s Shinjuku area during a sunset in December.
Photo:

kazuhiro nogi/Agence France-Presse/Getty Images

TOKYO—Japan’s economy recorded its longest growth streak since its heyday in the late 1980s, after expanding in the last three months of 2017 for an eighth straight quarter, the latest indication that Prime Minister

Shinzo Abe

is succeeding in generating more stable growth.

The world’s third-largest economy expanded at an annualized pace of 0.5% in the October-December quarter, but at a much slower pace than a revised 2.2% in the previous three months as the overall contribution to growth from trade weakened.

Economists polled by The Wall Street Journal had expected the economy to expand by 0.9%. Quarter-on-quarter growth was 0.1%, compared with a 0.2% projection.

Japan’s Economy Grows for Longest Stretch in 28 Years

While the data showed softer growth at the end of the year, the figures generally fit in with a picture of the sustained expansion targeted by Mr. Abe since he returned as prime minister just over five years ago with a pledge to lift Japan’s economy out of decades of stagnation.

With the economy growing for its longest spell in 28 years, further doubt may also be cast on the need for the Bank of Japan to keep supporting the economy with its ultraeasy monetary policy.

Exports, one of the key engines of the Japanese economy, contributed less to overall growth in the fourth quarter as shipments overseas were offset by a sharp jump in imports.

While trade failed to buoy growth as it has done in previous quarters, a senior Cabinet Office official said the increases in imports, such as smartphones from other parts of Asia, was another sign of strong demand at home.

More expensive oil also contributed to the higher import bill.

That left domestic consumption to lift growth. Private consumption, which accounts for roughly 60% of GDP, was up an annualized 0.5%, while capital expenditure rose 0.7%.

Some analysts expect internal strength to continue leading the expansion down the road.

Barclays analyst Yuichiro Nagai says there is considerable scope for an increase in capital spending thanks to solid corporate earnings and the need for investment to upgrade Japan’s aging capital stock and construction ahead of the 2020 Tokyo Olympics.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

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