Japan`s economic growth accelerates to 4.8% in July-Sept. qtr

TOKYO, Nov. 16 Kyodo -
Japan's economy expanded in the July-September quarter for the second straight
quarter, marking the fastest pace of growth in more than two years due to
pickups in exports and private consumption, the government said Monday.
The nation's gross domestic product grew an annualized real 4.8 percent in the
three months through September, the Cabinet Office said in a preliminary
report. The expansion is the largest since the January-March quarter of 2007,
and overwhelms the average market forecast of a 2.6 percent gain in a Kyodo
News survey.
In the previous quarter, GDP rose 2.7 percent, expanding for the first time in
five quarters.
Deputy Prime Minister Naoto Kan told a press conference that the GDP report
reflects ''moves that the economy is recovering'' in Japan and overseas.
But Kan, who is also state minister for economic and fiscal policy, warned
against becoming too optimistic about the prospects of the Japanese economy,
saying severe employment conditions, falling prices and other downside risks
persist.
The Democratic Party of Japan-led government plans to draw up a second extra
budget worth at least 2.7 trillion yen as soon as possible to ensure the
recovery takes hold, Kan added.
Many economists say the Japanese economy continued to pick up from the worst
recession in decades largely because of stimulus efforts at home and abroad and
that it is too early to say that a self-sustainable recovery has started.
''The economic growth is likely to stall early next year,'' said Hiromichi
Shirakawa, chief economist at Credit Suisse in Japan.
Shirakawa said an increase in private consumption was front-loaded due to the
government's stimulus measures and the real demand has yet to increase amid an
expected fall in year-end bonuses and a weak job market.
The Japanese economy will likely ''remain dependent on external demand,'' he
said, voicing concern over the prospects for the U.S. economy, a major market
for Japanese products.
On a quarter-to-quarter basis, Japan's GDP posted a price-adjusted real 1.2
percent rise from the April-June period, beating a market forecast of a 0.6
percent growth.
In the latest quarter, consumer spending -- which makes up about 60 percent of
Japanese GDP -- rose a real 0.7 percent from the previous quarter, for the
second straight quarter of growth, as durable goods spending surged on tax
breaks on low-emission cars and a government reward program for purchases of
greener consumer electronics.
Corporate capital spending rose 1.6 percent for the first increase in six
quarters, showing companies' improved appetite for making fresh business
investment.
Reflecting higher demand from other parts of Asia, Japanese exports increased
6.4 percent for the second straight quarterly gain.
Imports rose 3.4 percent, posting the first rise in three quarters.
Meanwhile, public investment fell 1.2 percent after increasing for four
quarters in a row.
Housing investment continued to fall, logging a 7.7 percent drop.
Domestic demand, made up of private consumption and capital investment among
others, sent GDP up 0.8 percentage point from the previous three months,
marking the first upward push in one-and-a-half years. Overseas demand drove
GDP up 0.4 point.
The domestic demand deflator, a gauge of price trends, dropped 2.6 percent, the
largest slide in more than half a century, reflecting falling prices in Japan.
The Bank of Japan projected in its semi-annual outlook report released Oct. 30
that Japan is expected to experience at least three years of deflation.
The central bank also expects Japan's economy will grow about 1.2 percent next
fiscal year, which starts in April 2010, after shrinking 3.2 percent in fiscal
2009.
Despite the GDP growth in real terms, nominal GDP fell an annualized 0.3
percent in the reporting period, which corresponds to a 0.1 percent contraction
from the previous quarter.
GDP is the total value of goods and services produced domestically.
==Kyodo