Japan moves out of recession on higher exports and lower oil prices

The Japanese economy moved out of recession in the fourth quarter of 2014, but the pace of growth was much weaker than expected, signalling that worries are not over for the country.

In the fourth quarter, Japan's gross domestic product (GDP) grew an annualised 2.2% due primarily to a rebound in exports. Economists polled by Reuters were expecting a growth of 3.7%.

Exports grew 0.2% in the quarter, as foreigners ordered more Japanese goods and services given the weakness in the yen.

Private consumption, which makes up about 60% of the economy, rose 0.3% in the final quarter, while business spending increased 0.1% following two quarters of declines.

Japanese consumers and businesses have benefited from the recent fall in oil prices. The country is largely dependent on oil imports for its energy needs.

From the third quarter, the economy grew by 0.6%, lower than economists' expectations for 0.9% growth.

The economy fell into technical recession in the third quarter, when it contracted 1.9% following a 7.1% contraction in the second quarter.

Japan's growth was hurt by its decision to increase sales tax to 8% with effect from April 2014. Following the move, consumers reduced their spending, forcing the government to put on hold its policy to further increase sales to 10%.

In order to shore up the economy, the Bank of Japan (BOJ) expanded its massive quantitative easing programme in October, increasing its monetary base by about 80tn yen (£443bn, $682bn, €599bn) each year from 60-70tn yen previously.

The BOJ is due to release its latest monetary decision on 18 February, and the central bank is expected to ease policies further to boost the economy.

The economy is expected to expand for at least the next nine quarters, albeit at a moderate pace, according to a survey of 41 economists by the Japan Center for Economic Research.