TOKYO — Japan’s third-quarter gross domestic product grew at a faster-than-expected rate, but longer-term concerns about the health of the economy and deflation persist.

This story first appeared in the November 17, 2009 issue of WWD. Subscribe Today.

Japan’s real GDP rose 1.2 percent in the July-to-September period from the prior quarter, the Cabinet Office said Monday. That figure reflects 4.8 percent growth on an annualized basis for the world’s second-largest economy. Stimulus measures, both in Japan and other countries, are considered responsible for much of the jump.

Japan officially emerged from recession in the second quarter of the year. GDP for the April-to-June period rose 0.7 percent, revised downward from an original estimate of 0.9 percent growth. Still, concerns about Japan’s job market and overall economic health linger. The government is preparing to declare the Japanese economy is in official deflation, according to a Cabinet Office spokeswoman.

Naoto Kan, Japan’s deputy prime minister, told journalists Monday that Japan’s export-driven economy remains “severe.”

“The economy is expected to continue to recover as overseas economies improve,” Kan said, according to a Reuters report. “At the same time, the employment situation remains very bad and downside risks exist in overseas economies.”

Unemployment figures have improved over the past couple months to come in at 5.3 percent in September.

Although private consumption has grown for the past two quarters, it’s clear that consumers are still holding back and hunting for bargains. Private consumption in the July to September period rose 0.7 percent from the previous quarter. It grew 1 percent between April and June.

Luxury goods companies and department stores have suffered the most in the current climate, while their fast fashion rivals such as Hennes & Mauritz, Forever 21 and Japan’s own Uniqlo are thriving.

Japan’s increasingly cost-conscious consumers will similarly embrace Abercrombie & Fitch, which will open its first Japan store in Ginza this winter, according to Sam Heinrich, senior manager at Japan Market Intelligence. He said he thinks the American brand will lure customers much like Louis Vuitton did in the late Nineties.

“[Abercrombie & Fitch’s] high quality yet casual selections will be very popular with Japanese youth who are not willing to pay the high prices of the luxury fashion brands,” Heinrich said.

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