May 16 - Japan's economy grew faster than expected in January-March, expanding at its quickest pace in a year on the back of solid private consumption and a rise in exports. As Jamie McGeever reports many are attributing the rise to Prime Minister Shinzo Abe's aggressive monetary and fiscal stimulus.
Abenomics is working! That's the conclusion from news that Japan's economy grew at its fastest pace in a year. Prime minister Shinzo Abe's bold steps to stimulate the world's 3rd largest economy helped fuel growth of 0.9 percent in the first quarter. That's more than expected, and translates into annual growth of 3.5 percent - easily the highest in G7 group of rich nations. Impressive stuff. But is it sustainable? Japanese Economics Minister Akira Amari, is upbeat. (SOUNDBITE) (Japanese) JAPANESE ECONOMICS MINISTER AKIRA AMARI SAYING: "Thanks to the new style of policies that the Abe cabinet have implemented we have taken the first step towards a new type of economic recovery. Now it's a question of making sure that we keep on track with by making sure that we follow through with our policies." Financial markets have certainly given "Abenomics" the thumbs up recently. The Nikkei stock market has pushed above 15,000 for the first time in over 5 years, and is up a whopping 75 percent in the last six months. The yen has slumped more than 20 percent against the dollar, giving a huge competitive boost to Japan's exports. But public spending splurges and limitless liquidity from the Bank of Japan are nothing new. And previous attempts over the past 20 years to drag Japan out of economic stagnation have mostly failed. Japan Macro Advisors Chief Economist Takuji Okubo is cautious (SOUNDBITE) (English) JAPAN MACRO ADVISORS CHIEF ECONOMIST TAKUJI OKUBO SAYING: "When you look into the contents of the growth, you do see that half of the growth is coming from public demand such as public works, government consumption and that is still concerning and that says that Japan's economy is still not self-sustaining." So is this time different? Perhaps. But Japan can't grow in isolation. With the rest of the world slowing down, even greater challenges lie ahead.