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Japan's economy picks up speed

Exports of Japanese consumer electronic products are helping to push growth.
Exports of Japanese consumer electronic products are helping to push growth.

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(CNN) -- The world's second-largest economy, Japan, has grown at its fastest rate in almost 14 years, new government figures show.

Robust exports and industrial output helped lift the economy in the December quarter, delivering better than expected growth of 1.7 percent over the September quarter.

On an annualized basis, GDP growth was 7 percent -- well above the median forecast of 4.6 percent and faster than anything Japan has seen since the June 1990 quarter.

The new data, released Wednesday, strengthens perceptions that after years of stagnation, the recent upturn in Japan's economic performance can be sustained.

Business investment and the export boom are being driven by strong demand in China, other Asian markets and the United States for Japanese consumer electronics and motor vehicles.

But on the domestic front, consumers remain cautious with demand still relatively soft.

Economics Minister Heizo Takenaka said Wednesday the data shows the Japanese economy is on a steady path to recovery.

The stock market has welcomed the figures, pushing the Nikkei 225 about 0.6 percent higher in early trade. That comes after the market closed Tuesday at a two-week high of 10,701.13

The dollar has slipped back below the 106 yen level, and is trading in Tokyo at 10.58 yen, near three-year lows.

The October to December real GDP growth marked the fourth straight quarter-on-quarter expansion.

"The basic message is that the speed of economic growth improved dramatically towards the end of calendar 2003, driven by exports and corporate investments," ING Asia chief economist Richard Jerram told Reuters news agency.

"And I think the outlook remains good going into 2004."

The next focus for economists will be the release next month of the Bank of Japan's closely watch tankan survey of business sentiment.

The last survey, released on December 12, showed confidence among big manufacturers was at its highest level in more than three years.

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