JAPAN/FILE: Japanese economy contracts less than expected between April and June, as exports and output recover from the March disasters

Record ID: 465496

  • Title: JAPAN/FILE: Japanese economy contracts less than expected between April and June, as exports and output recover from the March disasters
  • Date: 16th August 2011
  • Summary: TOKYO, JAPAN (FILE - AUGUST 2011) (REUTERS) BANK OF JAPAN BUILDING MORE OF BANK OF JAPAN POLICE OFFICER STANDING IN FRONT OF BUILDING SIGN HAKATA, JAPAN (FILE - JULY 2011) (REUTERS) SHOPPING MALL VARIOUS OF PEOPLE SHOPPING SENDAI, MIYAGI PREFECTURE, JAPAN (FILE - MARCH 2011) (REUTERS) SENDAI PORT AREA WITH CONTAINERS DAMAGED BY TSUNAMI CONTAINERS KNOCKED OVER BY TSUNAMI OIL REFINERY ON FIRE DAMAGED PORT AREA AND CONTAINERS IN OCEAN CONTAINER IN OCEAN KESENNUMA CITY, MIYAGI PREFECTURE, JAPAN (FILE - MARCH 2011) (REUTERS) TRUCK DRIVING THROUGH DESTROYED AREA FIRE FIGHTERS WALKING THROUGH DEBRIS RIVER WITH DEBRIS
  • Embargoed: 31st August 2011 13:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Business,Economic News
  • Reuters ID: LVA8CVGF1M4P068KNUID1EKQ78ED
  • Story Text: Data released on Monday (August 15) showed that Japan's economy contracted at a slower pace than expected in the second quarter as output and exports recovered from the devastating earthquake in March.
    However, a soaring yen, which could hit Japanese exports' competitiveness, and slowing global growth clouded the outlook for the economy.
    Gross Domestic Product (GDP) shrank 0.3 percent in the second quarter, less than a median forecast for a 0.7 percent contraction.
    On an annualised basis, the economy contracted 1.3 percent against a median forecast of a 2.6 percent annualised decline.
    Japan's Economics Minister Kaoru Yosano said that the money being used to rebuild the devastated northeastern parts of Japan would help the economy recover.
    "With the increasing investment in public projects relating to reconstruction, we believe that the economy is slowly getting back on its feet," he said.
    Private consumption, which makes up around 60 percent of the economy, fell 0.1 percent in April-June as some households cut back on spending after the earthquake, tsunami and nuclear meltdown in March.
    Corporate capital spending rose 0.2 percent against the market forecast of a 0.5 percent increase.
    Yosano said he predicted the recovery projects would help the economy pick up pace for the later half of the year.
    "With supply chains gradually recovering, as well as the fact that we are likely to see reconstruction-related projects increase, we believe that the latter half of this year will see relatively high growth," Yosano said.
    However, external demand, or net exports, pushed down GDP by 0.8 percentage point, as the disaster prevented some Japanese manufacturers from shipping goods abroad.
    Worries that Europe's sovereign debt woes could escalate into another global crisis could rob Japan of much-needed export demand, increasing the chance of further yen-selling intervention and monetary easing to secure economic recovery.
    Japan intervened in the currency market and eased monetary policy earlier this month, aiming to curb a yen rise near record highs that threatened to derail the export-reliant economy's recovery from the earthquake and tsunami.
    Analysts expect the economy to emerge from recession in July-September, after three straight quarters of contraction, but there is a growing uncertainty about global demand and the scope and timing of reconstruction spending at home.
  • Copyright Holder: FILE REUTERS (CAN SELL)
  • Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register