Business

Japan economy in surprise growth

People in Tokyo
Image caption Deflation in Japan is causing considerable concern

Japan's economy expanded faster than expected between July and September, but much of the growth was due to one-off factors.

The country's gross domestic product (GDP) was 0.9% during the third quarter, up from 0.4% in April to June.

Analysts said the growth was fuelled by sales of green cars before the end of government subsidies, and smokers buying cigarettes before a tax rise.

Growth is expected to be weaker in the last quarter due to reduced exports.

Japan's exports are continuing to be affected by the high value of the yen, which either makes its products more expensive for overseas customers, or reduces the earnings of Japanese exporters if they choose to cut prices to compensate.

"Third-quarter growth relied heavily on domestic demand, and this suggests a marked slowdown in the final quarter as stimulus-driven consumption loses steam and export growth slows," said Junko Nishioka, chief Japan economist at RBS Securities.

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