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167261
Thu, 03/10/2011 - 17:26
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Japan cuts Oct.-Dec. GDP as capital spending remains limited
TOKYO, March 10 Kyodo - The Japanese economy shrank at a faster pace than earlier thought in the last quarter of 2010, the government said Thursday, revising downward the nation's gross domestic product in a widely expected move that followed slower growth in corporate capital spending.
GDP fell an annualized 1.3 percent in the October-December period in real, or inflation-adjusted, terms, downgraded from a preliminary reported 1.1 percent decline, also affected by weaker consumer spending on the diminishing effects of the government's fiscal stimulus measures, the Cabinet Office said.
The office suggested the contraction in GDP, the first in five quarters, was temporary, and that the economy could expand again in the following quarter. Many experts echoed the view, but some said there are downside risks to Japan's growth, including the recent spike in commodities prices and a possible slowdown in emerging economies in Asia.
In the whole of 2010, the economy grew 3.9 percent from the previous year in real terms and 1.8 percent in nominal terms before adjustment for price changes, both unchanged from the preliminary report released Feb. 14.
The government reconfirmed China surpassed Japan as the world's second-biggest economy in the reporting year.
GDP is the total value of goods and services produced domestically.
The result for the three months through December corresponded to a contraction of a real 0.3 percent from the previous quarter, left unchanged from the earlier report.
On a nominal basis, the economy shrank 0.7 percent, cut from a 0.6 percent contraction. The GDP deflator, a wider measure of inflation than the consumer price index, stayed at minus 0.4 percent, adding to the evidence Japan has been mired in deflation.
Corporate capital spending grew a real 0.5 percent from the July-September quarter. But it was slower than the earlier reported 0.9 percent increase. Japan's revised GDP was significantly affected by the result of a Finance Ministry survey on private-sector financial statements that is not available at the time of the preliminary reports.
Business investments by Japanese firms are recovering after sharp falls due to the global financial turmoil. But the pace of recovery remains moderate as companies apparently favor hoarding cash rather than spending it.
Private consumption, which makes up some 60 percent of Japanese GDP, fell a downwardly revised 0.8 percent as a result of slower household spending, which had been boosted in earlier quarters by the government's subsidy programs for the purchases of environmentally friendly vehicles and home appliances.
The downward revision to GDP was ''almost in line with expectations and caused no major surprise,'' Hiromichi Shirakawa, chief economist at Credit Suisse Securities (Japan) Ltd., said while adding December falls in consumption were faster than earlier thought following a surge in November, just before the downsizing of one of the subsidy programs.
Shirakawa forecast a rebound in GDP in the January-March quarter on recovering exports and industrial output. But he also noted downside risks to economic growth.
''There is a question of who will keep buying products,'' he said. ''If the currently strong demand from China and other emerging economies in Asia starts waning, then that would cause a slowdown in production worldwide.''
The government also expressed caution.
''Our concern is about the situation in the Middle East,'' Takashi Wada, a parliamentary secretary of the Cabinet Office, told reporters, referring to civil unrest in the region and subsequent rises in crude oil and other commodity prices.
Among other components of GDP, public investment decreased 5.6 percent while housing investment expanded 2.9 percent.
Exports fell 0.8 percent with imports down 0.1 percent. Trade pushed GDP down 0.1 percentage point, while domestic demand subtracted 0.2 point from the growth rate.
The office said Japan's 2010 nominal GDP came to a downwardly revised $5.47 trillion, compared with $5.88 trillion for China, which became the world's second-biggest economy after the United States.
GDP fell an annualized 1.3 percent in the October-December period in real, or inflation-adjusted, terms, downgraded from a preliminary reported 1.1 percent decline, also affected by weaker consumer spending on the diminishing effects of the government's fiscal stimulus measures, the Cabinet Office said.
The office suggested the contraction in GDP, the first in five quarters, was temporary, and that the economy could expand again in the following quarter. Many experts echoed the view, but some said there are downside risks to Japan's growth, including the recent spike in commodities prices and a possible slowdown in emerging economies in Asia.
In the whole of 2010, the economy grew 3.9 percent from the previous year in real terms and 1.8 percent in nominal terms before adjustment for price changes, both unchanged from the preliminary report released Feb. 14.
The government reconfirmed China surpassed Japan as the world's second-biggest economy in the reporting year.
GDP is the total value of goods and services produced domestically.
The result for the three months through December corresponded to a contraction of a real 0.3 percent from the previous quarter, left unchanged from the earlier report.
On a nominal basis, the economy shrank 0.7 percent, cut from a 0.6 percent contraction. The GDP deflator, a wider measure of inflation than the consumer price index, stayed at minus 0.4 percent, adding to the evidence Japan has been mired in deflation.
Corporate capital spending grew a real 0.5 percent from the July-September quarter. But it was slower than the earlier reported 0.9 percent increase. Japan's revised GDP was significantly affected by the result of a Finance Ministry survey on private-sector financial statements that is not available at the time of the preliminary reports.
Business investments by Japanese firms are recovering after sharp falls due to the global financial turmoil. But the pace of recovery remains moderate as companies apparently favor hoarding cash rather than spending it.
Private consumption, which makes up some 60 percent of Japanese GDP, fell a downwardly revised 0.8 percent as a result of slower household spending, which had been boosted in earlier quarters by the government's subsidy programs for the purchases of environmentally friendly vehicles and home appliances.
The downward revision to GDP was ''almost in line with expectations and caused no major surprise,'' Hiromichi Shirakawa, chief economist at Credit Suisse Securities (Japan) Ltd., said while adding December falls in consumption were faster than earlier thought following a surge in November, just before the downsizing of one of the subsidy programs.
Shirakawa forecast a rebound in GDP in the January-March quarter on recovering exports and industrial output. But he also noted downside risks to economic growth.
''There is a question of who will keep buying products,'' he said. ''If the currently strong demand from China and other emerging economies in Asia starts waning, then that would cause a slowdown in production worldwide.''
The government also expressed caution.
''Our concern is about the situation in the Middle East,'' Takashi Wada, a parliamentary secretary of the Cabinet Office, told reporters, referring to civil unrest in the region and subsequent rises in crude oil and other commodity prices.
Among other components of GDP, public investment decreased 5.6 percent while housing investment expanded 2.9 percent.
Exports fell 0.8 percent with imports down 0.1 percent. Trade pushed GDP down 0.1 percentage point, while domestic demand subtracted 0.2 point from the growth rate.
The office said Japan's 2010 nominal GDP came to a downwardly revised $5.47 trillion, compared with $5.88 trillion for China, which became the world's second-biggest economy after the United States.
