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Optimistic outlook for Japanese economy

Economic growth in Japan has slowed to 0.4% in the three months ending in September, as domestic demand declined. Despite this, analysts believe the recovery remains steady after a fourth straight positive quarter. Growth eased from the 0.8% pace of the second quarter, a preliminary government estimate showed, but the outcome was still better than expected.

Both the Bank of Japan and the government have both recently declared that the economy has moved out of a soft patch and there are signs that a return to inflation is near, after almost eight years of falls in consumer prices. The annual rate of growth was 1.7% in Q3, after 3.3% in the second and 4.9% in the first, according to an initial estimate which may be revised next month.

Despite the slowdown, analysts say the world`s second largest economy remained on track to recovery after a decade-long slump and momentum should continue into the fourth quarter. In the third quarter, private consumption, which accounts for about 55% of the economy, gained 0.3%. Exports picked up by 2.7%, after 3.1% growth in the previous quarter.