17
Aug
Japan's Economy Leaves Recession
Japan has come out of recession after its economy grew by 0.9%
in the April-to-June quarter. The growth comes after four
consecutive quarters of contraction.
Correspondents say the rise is due to a huge government stimulus
package and it is unclear whether the momentum will be sustained
when this is concluded. Recent figures show other economies coming
out of recession, including Germany, France and Hong Kong, a sign
the global slowdown is easing. Despite Japan exiting recession, the
country's main share index, the Nikkei, fell back as the rate of
growth was not as large as analysts had hoped. If Japan's latest
quarterly rate were maintained for a full year, the economy would
grow 3.7%, but this was less than market expectations of 3.9%. The
Nikkei ended down 329 points or 3.1% to 10,269.
'Positive contribution'
Japan officially fell into recession last year and there was a
dramatic fall in growth in the January-March period as the world
economic slowdown hit Japanese exports hard. Government stimulus
measures totalling $260bn (£159bn) helped to boost the
economy, including cash handouts and subsidies to buy
energy-efficient cars and home appliances, the BBC's Roland Buerk
in Tokyo says. Manufacturers also benefited from recovering demand
in China and other markets, with overall exports up 6.3% during the
quarter. But Japan could still face a long road to sustainable
recovery, our correspondent says, with domestic private consumption
rising only 0.8% despite the stimulus measures. Seijiro Takeshita,
director of Mizuho Financial, Japan's second largest banking group,
told the BBC that the Japanese economy was now staging a "true
comeback". "We are definitely getting out of the excessive
pessimism that we have been seeing... however, a lot of big
questions remain, namely private consumption," he said. "We know
this time it was good, but that was due to a lot of government
stimulus spending."
European recovery
Japan is heavily reliant on its exports. The slowdown in the US
has hit it hard as American consumers have limited their spending.
In a recent Bank of Japan report, the central bank underlined its
cautious view of the economy. While it said conditions in the
Japanese economy had stopped worsening, it warned that unemployment
would stay high and consumer spending low. Last month, the bank
forecast that Japan's economy would shrink by 3.4% in the 12 months
to 31 March 2010. The French and German economies both grew by 0.3%
between April and June, bringing to an end recessions in Europe's
largest economies that have lasted a year. Analysts had not
expected the data, suggesting recovery could be faster than
previously expected. And Hong Kong recorded growth of 3.3% in the
three months from April to June. That data was also better than had
been expected, with the government subsequently increasing its
forecast for growth in the whole year.
BBC News. (2009). Japan's Economy Leaves Recession.
[Online]. Available from: http://news.bbc.co.uk/1/hi/business/8204075.stm.
Accessed 17th October 2009.