Economy grows for 3rd straight qtr, fear of double-dip recession eases+

TOKYO, Feb. 15 Kyodo -
Japan's economy grew an annualized real 4.6 percent in the October-December
quarter for the third consecutive quarter of expansion, as corporate capital
investment revived amid a recovery in exports while consumer spending continued
to pick up on stimulus measures, the government said Monday.

The expansion, as measured by gross domestic product, corresponds to a 1.1
percent rise from the July-September quarter, the Cabinet Office said in a
preliminary report.
The figures, which beat the average market forecasts of an annualized 3.5
percent increase and 0.9 percent quarterly growth, prompted Finance Minister
Naoto Kan to express guarded optimism.
''Fears of the nation's economy falling into a double-dip recession have faded
a little,'' he told reporters.
But Kan, also the state minister for economic and fiscal policy, warned against
complacency, saying employment and overseas economic conditions are still
uncertain.
Similarly, Prime Minister Yukio Hatoyama said the current situation does not
warrant any optimism, noting that the economy is still highly dependent on
external demand and a high unemployment rate continues to be one of the major
downside risks.
''This is welcome news. But we can't be filled with unrestrained joy,''
Hatoyama told reporters Monday evening.
The latest GDP data showed that the pace of the economic recovery accelerated
sharply from a revised 0.01 percent quarter on quarter gain in the
July-September quarter.
Domestic demand contributed to GDP growth for the first time in seven quarters
on pickups in consumer spending and corporate investment in plant and
equipment. Exports also rose on higher demand from the United States and other
parts of Asia.
Despite the stronger growth in the last quarter of 2009, the Japanese economy
in the whole of 2009 logged a 5.0 percent decline from the previous year, the
largest contraction since the government began compiling comparable data in
1955, due to a serious slump marked in the January-March period amid the global
financial crisis, the Cabinet Office said.
The 2009 contraction sharply surpassed the previous record shrinkage of a 2.0
percent drop in 1998.
The office also said Japan's nominal GDP stood at $5.08 trillion in 2009,
narrowly surpassing that of China at $4.91 trillion. The data suggest that
Japan's economy may be eclipsed by China's in the near future, possibly this
year. Japan has remained the world's second-largest economy for about 40 years.
In the latest reporting quarter in Japan, consumer spending -- which makes up
about 60 percent of the nation's GDP -- increased for the third straight
quarter, up a real 0.7 percent from the July-September period, largely backed
by government incentives for the purchase of energy-saving home electronic
appliances and greener cars.
Corporate capital spending rose 1.0 percent for the first expansion in seven
quarters.
''It was quite surprising'' to see an increase in consumer spending,
considering recent falling wages and a record drop in winter bonuses, Minoru
Nogimori, an economist at Nomura Securities Co., said.
The consumption improvement may be short-lived and although it is a positive
sign that increasing exports helped boost companies' appetite for capital
investment, it would be premature to say a ''sustainable'' recovery has started
in Japan, he said.
''We expect an economic recovery in Japan, but not a very strong one. It's
likely to go through a temporary lull,'' Nogimori said.
During the reporting period, Japanese exports increased 5.0 percent for the
third straight quarterly gain, mainly on bullish demand for cars and
construction machinery. Imports rose 1.3 percent for the second straight
quarterly gain.
Public investment fell 1.6 percent as Hatoyama's government that took power in
September canceled some of the projects mapped out by the previous government.
Domestic demand sent GDP up 0.6 percentage point. Demand from overseas drove
GDP up 0.5 point.
GDP is the total value of goods and services produced domestically. Real GDP
figures are adjusted for price and seasonal variations.
On an unadjusted nominal basis, GDP rose an annualized 0.9 percent in the
reporting period, which corresponds to a 0.2 percent expansion from the
previous quarter.
It is the first time since the January-March quarter of 2008 that the nation's
nominal GDP has expanded, but the growth pace of nominal GDP, which is said to
better reflect the economic conditions that people actually feel in their
lives, is weaker than the adjusted real GDP.
The GDP deflator, a key gauge of price trends, dropped 0.9 percent from the
previous quarter, reflecting falling prices in Japan. It translates into a
record-large 3.0 percent contraction from a year earlier.
==Kyodo
2010-02-15 23:27:26


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