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Wednesday, June 11, 2003

Japan Continues Its Weary Path

I suppose there are some crumbs for Joerg here, the Japanese economy did in the end actually grow, if only by a measly 0.1%, during the first three months. It is important to remember that these are real figures, in nominal (money) terms, with deflation continuing, the economy actually shrank. Although, of course, with the Yen rising, the share of the world economy may have increased. The only conclusion to be drawn from all this, economic statistics are complicated things. Bottom line, Japan seems to be moving back into recession.

Japan's economy grew slightly in the three months to March, according to revised figures released early on Wednesday which showed that while the pace of growth is still slowing, the economy did not contract in the first quarter as economists had predicted. Revised gross domestic product figures showed that GDP grew by 0.1 per cent in the first quarter. Provisional data released last month indicated the size of the economy stayed the same over the quarter, and economists had forecast that Wednesday's revision would reveal a contraction. But the revised figures provide only crumbs of comfort as they did not point to a turnaround in the economy, which has been slowing steadily in the past year. Some economists still say Japan's economy may be slipping back into recession - which is defined technically as two consecutive quarters of contraction. The loss of growth momentum has been blamed on a fall in exports to the US, where consumption in the first quarter was subdued in the run-up to the war in Iraq, and a pre-Sars drop in shipments to Asia. Household consumption in Japan, however, remained surprisingly strong as people dug into savings so they could spend and maintain the same standard of living. GDP grew 0.5 per cent between October and December, 0.8 per cent in the quarter before that and 1.4 per cent between April and June last year.
Source: Financial Times

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