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206307
Fri, 09/09/2011 - 18:07
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https://oananews.org//node/206307
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Japan's 2nd-qtr GDP shrinks annual 2.1%, revised down
TOKYO, Sept. 9 Kyodo - The Japanese economy shrank at an annualized rate of 2.1 percent in the three months through June, the government said Friday, revising downward an earlier report of a 1.3 percent contraction on weak corporate capital spending following the March earthquake and tsunami.
The revised gross domestic product in inflation-adjusted terms almost matched market forecasts, which had factored in deteriorating business sentiment amid slower production and exports in the aftermath of the March 11 disaster. Japan's GDP declined for the third straight quarter.
But analysts said there is a chance the economy could make a strong rebound in the following quarters, as state-led reconstruction work would accelerate with over 10 trillion yen ($130 billion) in government spending.
The second-quarter real GDP corresponded to 0.5 percent contraction from the January-March period, also downgraded from a preliminarily reported 0.3 percent slide, the Cabinet Office said.
GDP is the total value of goods and services produced domestically. Real numbers are adjusted for price and seasonal variations.
In nominal terms, or before inflation adjustment, the world's third-biggest economy following the United States and China shrank 1.5 percent, or an annualized 6.0 percent, from the January-March period, downgraded from 1.4 percent and 5.7 percent contractions, respectively.
The GDP deflator, a wider gauge of inflation than the consumer price index, dropped 1.0 percent, upwardly revised from 1.1 percent fall but still indicating the Japanese economy stayed mired in chronic deflation.
Capital spending by companies on such purposes as building new plants or introducing new equipment slowed 0.9 percent, compared with 0.2 percent growth in the preliminary report released Aug. 15.
The Finance Ministry's survey on corporate financial statement, a key factor in revising GDP, last week showed weaker business sentiment amid a deteriorating earnings environment. In the data, capital spending marked a 7.8 percent fall in the second quarter from a year earlier, paving the way for the latest GDP downgrade.
Such key sectors as utility, electric machinery and telecommunication showed markedly weak appetite for fresh spending, analysts said.
Power houses, which normally make large one-shot investment in capacity building, have currently been forced to spend on ensuring safety in nuclear power generation and shelve earlier plans for bigger investments, given the crisis at Tokyo Electric Power Co.'s tsunami-hit Fukushima Daiichi plant.
But analysts also said the currently restrained business investment, which some say is about 15 percent lower than the potential, might herald a strong pickup in the aftermath. ''Room for recovery is extremely big,'' economists at SMBC Nikko Securities Inc. said in their report.
Mitsumaru Kumagai, chief economist at the Daiwa Institute of Research, was among those who forecast positive GDP growths in the following quarters.
''We expect the Japanese economy to tread a path of stead recovery, supported by domestic demand, as full-scale demand for reconstruction would emerge in the second half of fiscal 2011,'' Kumagai said, referring to a six-month period starting October.
The government also struck an optimistic note.
''Supply-side constraints (triggered by the earthquake) have been gradually eased. Production and shipments have been picking up, and sentiment has stopped deteriorating. We judge the economy has been recovering,'' economic and fiscal policy minister Motohisa Furukawa told reporters after the release of the revised growth figures.
But slowing overseas economies and poor performances in stock markets are feared to amount to downside risks to Japan's recovery, Furukawa said.
Private consumption, accounting for nearly 60 percent of Japan's GDP, slid 0.02 percent, slightly upgraded from a 0.07 percent fall, amid slower pace of decline in sales of such products as vehicles, the Cabinet Office said.
Housing investment lost 1.8 percent, upwardly revised from minus 1.9 percent, while public investment advanced 4.3 percent, also upgraded from a 3.0 percent hike, apparently reflecting accelerated government spending on reconstruction work.
Domestic demand pushed the GDP higher by 0.2 percentage point, downgraded from 0.4 percentage point.
Exports of goods and services fell an unrevised 0.8 percent, while imports grew 0.01 percent, almost unchanged from a 0.01 percent decline. External demand subtracted an unrevised 0.8 percentage point from the GDP.
The revised gross domestic product in inflation-adjusted terms almost matched market forecasts, which had factored in deteriorating business sentiment amid slower production and exports in the aftermath of the March 11 disaster. Japan's GDP declined for the third straight quarter.
But analysts said there is a chance the economy could make a strong rebound in the following quarters, as state-led reconstruction work would accelerate with over 10 trillion yen ($130 billion) in government spending.
The second-quarter real GDP corresponded to 0.5 percent contraction from the January-March period, also downgraded from a preliminarily reported 0.3 percent slide, the Cabinet Office said.
GDP is the total value of goods and services produced domestically. Real numbers are adjusted for price and seasonal variations.
In nominal terms, or before inflation adjustment, the world's third-biggest economy following the United States and China shrank 1.5 percent, or an annualized 6.0 percent, from the January-March period, downgraded from 1.4 percent and 5.7 percent contractions, respectively.
The GDP deflator, a wider gauge of inflation than the consumer price index, dropped 1.0 percent, upwardly revised from 1.1 percent fall but still indicating the Japanese economy stayed mired in chronic deflation.
Capital spending by companies on such purposes as building new plants or introducing new equipment slowed 0.9 percent, compared with 0.2 percent growth in the preliminary report released Aug. 15.
The Finance Ministry's survey on corporate financial statement, a key factor in revising GDP, last week showed weaker business sentiment amid a deteriorating earnings environment. In the data, capital spending marked a 7.8 percent fall in the second quarter from a year earlier, paving the way for the latest GDP downgrade.
Such key sectors as utility, electric machinery and telecommunication showed markedly weak appetite for fresh spending, analysts said.
Power houses, which normally make large one-shot investment in capacity building, have currently been forced to spend on ensuring safety in nuclear power generation and shelve earlier plans for bigger investments, given the crisis at Tokyo Electric Power Co.'s tsunami-hit Fukushima Daiichi plant.
But analysts also said the currently restrained business investment, which some say is about 15 percent lower than the potential, might herald a strong pickup in the aftermath. ''Room for recovery is extremely big,'' economists at SMBC Nikko Securities Inc. said in their report.
Mitsumaru Kumagai, chief economist at the Daiwa Institute of Research, was among those who forecast positive GDP growths in the following quarters.
''We expect the Japanese economy to tread a path of stead recovery, supported by domestic demand, as full-scale demand for reconstruction would emerge in the second half of fiscal 2011,'' Kumagai said, referring to a six-month period starting October.
The government also struck an optimistic note.
''Supply-side constraints (triggered by the earthquake) have been gradually eased. Production and shipments have been picking up, and sentiment has stopped deteriorating. We judge the economy has been recovering,'' economic and fiscal policy minister Motohisa Furukawa told reporters after the release of the revised growth figures.
But slowing overseas economies and poor performances in stock markets are feared to amount to downside risks to Japan's recovery, Furukawa said.
Private consumption, accounting for nearly 60 percent of Japan's GDP, slid 0.02 percent, slightly upgraded from a 0.07 percent fall, amid slower pace of decline in sales of such products as vehicles, the Cabinet Office said.
Housing investment lost 1.8 percent, upwardly revised from minus 1.9 percent, while public investment advanced 4.3 percent, also upgraded from a 3.0 percent hike, apparently reflecting accelerated government spending on reconstruction work.
Domestic demand pushed the GDP higher by 0.2 percentage point, downgraded from 0.4 percentage point.
Exports of goods and services fell an unrevised 0.8 percent, while imports grew 0.01 percent, almost unchanged from a 0.01 percent decline. External demand subtracted an unrevised 0.8 percentage point from the GDP.
