Japan’s economy grew at an annualised rate of 4.1 per cent in the first quarter

The Japanese gross domestic product (GDP) grew by 1 per cent in the first-quarter of 2013, compared to previous quarter, primarily due to the introduction of aggressive financial measures by Prime Minister Shinzo Abe.

The improvement in GDP is higher than the initial estimates of 0.9 per cent quarter-over-quarter.

During the quarter, capital investment declined 0.3 per cent; the government had initially estimated a decline of 0.7 per cent. Domestic demand grew by 0.6 per cent against the expectations of 0.5 per cent.

The surplus in the present account was at 750bn Japanese yen ($7.70bn), an increase of 100.8 per cent from the same period a year earlier.

Japan introduced a host of measures to stir up the stagnant economy. The country’s central bank, the Bank of Japan doubled its inflation target. In an effort to drive consumer spending, the bank kept the long term interest rates low and injected millions of Yen into the market.

With more money floating around in the market and lending rates being low, consumers and businesses had cash to invest and spend, which boosted demand in the home market and eventually led to increase in prices of goods and services.

Moreover, this strategy left a significant impact on the value of Yen, which almost dropped by 25 per cent against the US currency since November 2012. This helped Japanese firms in becoming more competitive in foreign markets.

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