Japan defied expectations this morning by announcing the economy continued to grow through to the end of last year on resilient private spending and rising exports.
On the same day, the Bank of Japan (BoJ) voted to leave monetary policy unchanged, despite growing political pressure to adopt more aggressive measures to fight deflation.
Attention is now focused on who Prime Minister Junichiro Koizumi will nominate to replace BoJ governor Mr Masaru Hayami, who is due to retire next month.
Gross domestic product (GDP) in the December quarter slowed to 0.5 per cent from the three months to September when it expanded a revised 0.7 per cent.
But the figure contrasted sharply with private economist expectations of around a 0.4 per cent contraction, boosting stock prices and the yen.
"It's a surprise, it was totally out of the range of economists surveyed," said JP Morgan chief economist Mr Masaaki Kanno. On an annualised basis, the world's second-biggest economy expanded 2 per cent in October-December.
"The main surprise was a much stronger-than-expected private consumption figure," said Dresdner Kleinwort Wasserstein (DKW) economist Mr Shuji Shirota.
Private consumption, which accounts for about 60 per cent of GDP, grew 0.1 per cent in the three months to December, much slower than the 0.8 per cent rise seen in July-September, but remaining positive despite fears over a slump in wages and growing unemployment.
AFP