Japan 3Q GDP Surprises With 4.8 Percent Growth

TOMOKO A. HOSAKA

TOKYO (AP) — Japan's economy flexed more muscle than expected in the third quarter, as rekindled demand at home and abroad fueled its largest expansion in more than two years.

Real gross domestic product grew at an annual pace of 4.8 percent in the July-September period, the government said Monday, beating even the most bullish of predictions. Kyodo news agency had forecast an average annualized increase of 2.6 percent based on its survey of economists.

GDP, or the total value of the nation's goods and services, has climbed for two straight quarters and recorded its fastest acceleration since a 5.7 percent jump in the first quarter of 2007. In the April-June quarter, GDP rose at a revised annual pace of 2.7 percent.

The latest data bolster evidence that the world's biggest economies are gaining strength, on track to finish the year in far better shape than they began. The U.S. and Europe finally shook off recession in the third quarter, and China's growth rate surged to an 8.9 percent pace.

Improving health among its trading partners is critical for Japan's prospects. The world's No. 2 economy relies heavily on exports to drive growth, and the sharp contraction in overseas demand last year sent Japan plunging into its worst recession since World War II.