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Japan posts strong growth rate

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Japan
Nikkei
Economy
Junichiro Koizumi

(CNN) -- The world's second-largest economy, Japan, is growing at an annualized rate of 3.3 percent, according to new figures released by the government on Monday.

The Cabinet Office said revised data shows Japan's economy expanded at a seasonally adjusted rate of 0.8 percent in the April-June period from the previous quarter.

That was up from a 0.3 percent increase in the initial report. On an annualized basis, gross domestic product (GDP) growth jumped from an initial 1.1 percent to 3.3 percent.

GDP is the total value of goods and services produced domestically.

The strong GDP figure provides a platform of economic confidence for Prime Minister Junichiro Koizumi and his ruling Liberal Democratic Party coalition as they celebrate a stunning victory in Sunday's general election.

The stock market has also hailed the win, with the benchmark Nikkei 225 stock average -- already trading at a four-year high -- up about 1 percent near midday on Monday.

Koizumi is now expected to embark on a program of economic and administrative reform, starting with his postal privatization plan that was the catalyst for him calling Sunday's general election.

Rebels within the LDP combined with the opposition to defeat the postal reform bills in the upper house last month.

But the crushing win for the LDP means that with its coalition partner, the New Komeito Party, Koizumi will have the numbers in the lower house to force the legislation through parliament.

When Koizumi came to power in April 2001, Japan was stuck in the economic doldrums, continuing a pattern of poor performance that had blighted virtually the entire previous decade.

He promised economic recovery, built on an overhaul of the banks and wide-ranging administrative reform.

That recovery has been a long, slow process, with several hiccups along the way, including a recession that saw GDP contract by almost 1 percent during Koizumi's first year in office.

But all the recent economic data suggests that a relatively strong upturn is under way in 2005. There has been a steady rise in full-time employment, real incomes are up, and land values in key residential areas of Tokyo are on the rise.

Richard Jerram, with Macquarie Research in Tokyo, says the economy's positive direction is increasingly apparent.

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