JAPAN: Experts say Japan's lowered GDP figures signal a gloomy economic outlook for next year

Record ID: 465295

  • Title: JAPAN: Experts say Japan's lowered GDP figures signal a gloomy economic outlook for next year
  • Date: 10th December 2009
  • Summary: TOKYO, JAPAN (DECEMBER 9, 2009) (REUTERS) CHIEF CABINET SECRETARY HIROFUMI HIRANO STARTING NEWS CONFERENCE (SOUNDBITE) (Japanese) CHIEF CABINET SECRETARY HIROFUMI HIRANO SAYING: "The 7.2 trillion yen ($81 billion) stimulus package that we unveiled yesterday will have an effect worth about 25 trillion yen ( 283 billion U.S. dollars) including loan guarantees and non-paying items. I believe this will shore up the markets."
  • Embargoed: 25th December 2009 12:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Economic News
  • Reuters ID: LVA40U7AA9FB8DT1L8A7O4C9SV39
  • Story Text: Japan's economy grew at a far slower pace in the third quarter than first thought as capital spending fell, data released on Wednesday (December 9) showed, but a double-dip recession is seen as unlikely as exports rebound and corporate spending shows signs of bottoming out.
    Revised figures also showed that personal spending continued to improve due to subsidies from Japan's previous government. Still, the figures are likely to put pressure on the new government and the Bank of Japan (BOJ) to craft new policies to support the corporate sector, which is lagging improvements in private consumption.
    Japan's revised GDP figures released on Wednesday showed gross domestic product grew 0.3 percent in a period from July to September compared with a median forecast of 0.7 percent expansion and the government's preliminary estimate of 1.2 percent growth.
    "I think Japan will face a tough situation during the first half of next year because that's when the policy made by the previous government will expire. Japan will experience a negative growth earlier next year due to a substantial decrease in corporate investment," said Hideki Matsumura, senior analyst at the Japan Research Institute.
    Japan's Democratic Party-led government, in power for about three months, unveiled on Tuesday (December 8) a 7.2 trillion yen ($81 billion) stimulus package that focuses on the household sector by providing support for job seekers and extending subsidies on energy-efficient goods inherited from the previous government.
    "I think the stimulus package has a positive effect, but the effect will remain small. That's mainly because the scale of the stimulus package is limited and has no immediate effect. We probably won't see any effect of government's consumption policy now since it's about after the next fiscal year," said analyst Matsumura.
    Although, economists warn that the Democrats' stimulus measures may not have much impact as there is insufficient new spending and the pace of recovery will be very slow unless further steps are taken, the government remains confident.
    "The 7.2 trillion yen ($81 billion) stimulus package that we unveiled yesterday will have an effect worth about 25 trillion yen ( 283 billion dollars) including loan guarantees and non-paying items. I believe this will shore up the markets," said Japan's top spokesman Hirofumi Hirano told a regular news conference on Wednesday.
    The U.S. economy also grew more slowly than first thought in the third quarter, but still expanded at a 2.8 percent annualised rate, while the euro zone grew 0.4 percent in the quarter.
    On an annualised basis, Japan's economy expanded 1.3 percent, against the government's initial reading of 4.8 percent growth. The median forecast was for 2.8 percent annualised growth.
    Worries about the pace of economic recovery at home and abroad helped push the Nikkei share average down 1.2 percent, while Japanese government bond futures rose.
    Making up for sluggish domestic demand were exports, with external demand boosting the economy by 0.4 percentage point, the same as the preliminary figure.
    Private consumption also rose 0.9 percent, slightly faster than the preliminary estimate of a 0.7 percent increase.
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