ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

It's official: Japan enjoys its second-longest postwar expansion

Cabinet Office puts formal seal on recovery's standing, but 15 months late

Japan's economic expansion has been riding a weak yen, the Bank of Japan's expansionary monetary policy and the strength of overseas economies.

TOKYO -- Japan's Cabinet Office has confirmed that the Japanese economy expanded for a 58th consecutive month in September 2017, marking the second-longest recovery since the end of World War II.

Officially, the streak has unseated the Izanagi boom, which began in 1965 and continued for 57 months, from the No. 2 position. But it continues and next month is likely to become Japan's longest postwar winning streak.

The look back at where the expansion stood 15 months ago comes with worldwide economic uncertainty on the rise. A number of factors have been feeding this trepidation, but most of it can be chalked up to the U.S.-China trade war as well as the big nations' economic and legal tussling. Another factor is the saturated smartphone market, which can no longer be counted on to stoke economies around the globe.

Japan's recovery began in December 2012, the same month that Shinzo Abe was inaugurated for his second stint as prime minister. At the time, market players were already anticipating the roll out of what the Bank of Japan would end up calling its quantitative and qualitative monetary easing policy, which has flooded Japan's financial system with yen.

Early on, the expansion also got a boost from aggressive monetary easing by the central banks of other countries, and it continues to be fueled by strong overseas economies, especially that of the U.S.

The Cabinet Office's special panel of experts held a meeting on Thursday and made the official assessment that the Japanese economy expanded for a 58th consecutive month in September 2017, based on production, consumption and other data.

The special panel, led by Hiroshi Yoshikawa, a professor at Rissho University, determines the peaks and troughs of economic cycles.

Toshimitsu Motegi, Japan's economic and fiscal policy minister, had already said in September 2017 that the current economic expansion was "likely to have exceeded the Izanagi boom." But only the special panel can make an official assessment.

The BOJ has been supporting much of the growth by buying large amounts of government bonds and other assets. It has also kept interest rates at ultralow levels. It has even pushed one rate into negative territory.

All the yen printing has worked to weaken Japan's currency. Money tends to flow from low-rate countries to those offering higher rates. At one point during the expansion, it took 125 yen to buy a dollar. At the beginning of 2013, it took 80 yen to purchase a dollar.

A weak currency makes a nation's exports more affordable. The exporters' dollar earnings are then worth more once they are brought back home and traded for cheap local money.

The streak is believed to be ongoing. If it lasts until next month, it will reach 74 months and become the longest in post-World War II Japan. The country's longest postwar expansion, the Izanami boom, began in 2002 and rode the new economy into 2008, lasting for 73 months.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends May 26th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media