- Title: JAPAN: Country returns to growth ending longest recession since World War Two
- Date: 18th August 2009
- Summary: TOKYO, JAPAN (AUGUST 17, 2009) (REUTERS) VARIOUS OF PEOPLE WALKING IN TOKYO'S GINZA SHOPPING DISTRICT
- Embargoed: 2nd September 2009 13:00
- Location: Japan
- Country: Japan
- Topics: Economic News
- Reuters ID: LVA1BAYM5JR0053JEIVJ1YIZRXGJ
- Story Text: Japan's economy grew 0.9 percent in the three months to June, ending its longest recession since World War Two on the back of exports and government stimulus spending, but analysts say it will be a long road to a sustained recovery.
The growth in the world's No.2 economy is likely to continue in coming quarters, providing further evidence that the worst of the damage wrought by a global financial crisis may be over.
It may also give the ruling party a lift ahead of a general election, but economists and policy-makers are wary about the outlook going into next year, which depends on a recovery in world demand.
The preliminary GDP figure released Monday (August 17) fell slightly short of a median market forecast of a 1.0 percent increase.
Nonetheless, it put Japan in the first camp of G7 countries that have pulled out of recession, along with Germany and France.
It was the first period of growth in five quarters and follows a revised 3.1 percent contraction in January-March and a 3.5 percent decrease in the final quarter of last year, which was the biggest drop on record.
On an annualised basis, Japan's economy grew 3.7 percent from the first quarter, the fastest since January-March 2008. That compared with a 1.0 percent contraction in the United States in the same quarter. The euro zone economy shrank 0.1 percent after a 2.5 percent fall in the first three months.
"Conditions are still severe but Japan's economy is expected to pick up," Japanese Economics Minister Yoshimasa Hayashi told reporters after the release of the GDP data.
The positive growth figures may give some political ammunition to Prime Minister Taro Aso's Liberal Democratic Party, which polls show faces defeat in a general election on August 30.
Economists expect Japanese GDP to grow 0.4 percent in July-September from the previous quarter, followed by a 0.5 percent increase in October-December, a Reuters poll showed.
But economists say the recovery could lose momentum later this year when a temporary boost from government stimulus steps, such as one-off payments and subsidies for energy-efficient cars and home appliances, peters out.
In the April-June period, external demand, the balance of exports and imports, contributed 1.6 percentage points to GDP, due in part to China's $585 billion stimulus package and other such spending rolled out by governments around the world to combat the global recession.
Tokyo's stimulus measures helped private consumption, which accounts for about 60 percent of the economy, to rise 0.8 percent and public investment to increase 8.1 percent.
Capital spending fell 4.3 percent, smaller than a 5.9 percent drop expected by economists but marking the fifth straight quarter of slump, as companies remain cautious about the outlook for global final demand.
Japan's economy shrank more than most other major economies until January-March as its exports had plunged due largely to its specialisation in machinery and high-end consumer products such as cars and flat-screen televisions.
- Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None