Japan economic growth exceeds expectations

This is the equivalent of an annu lised increase of 4.6 percent. However, despite the growth in October to December, the economy contracted by 5 percent over the whole of 2009.China now rivals Japan for the rank of the world's second-biggest economy, and is on course to overtake Japan. China's economy expanded by 8.7 percent in 2009. "The Japanese population has become quite sober about themselves and relatively pessimistic about the country's outlook," said Takuji Okubo, chief economist at Societe Generale in Tokyo. Japan's return to growth has been led by exports, particularly to China, which is now its largest overseas market.

Consumer spending, which accounts for about 60 percent of the Japanese economy, rose 0.7 percent from the previous quarter as shoppers took advantage of government incentives on cars and home appliances. However, consumer spending remains weak in general.