August 18, 2009
The Japanese economy grew for the first time in five quarters, indicating that the nation is now emerging from its worst postwar slump, a preliminary report showed Monday.
The country's seasonally adjusted gross domestic product, which excludes influences from price fluctuations, increased 0.9 percent in real terms in the April-June period from the previous quarter, according to the Cabinet Office's report. On an annualized basis, real GDP was up 3.7 percent.
The last time Japan's GDP grew was in the January-March period in 2008.
After the "Lehman Shock" in September, real GDP contracted by double-digit figures in the October-December period and January-March period from the preceding quarters.
If GDP continues to rise at the rate of the latest quarter, the real growth rate for fiscal 2009 from fiscal 2008 is expected to be minus 2.0 percent.
"The effects from the economic stimulus measures will also appear in subsequent quarters. There is a possibility that the real growth rate for fiscal 2009 will top minus 3.3 percent estimated by the Cabinet Office," Yoshimasa Hayashi, state minister in charge of economic and fiscal policies, told reporters after the latest GDP figures were released.
However, a full-fledged recovery is still far away.
The real GDP amount in the April-June quarter stood at 526 trillion yen on an annualized basis, much smaller than the peak of 569 trillion yen in the January-March period of 2008.
Nominal GDP, which reflects price fluctuations and is closer to what people feel in their daily lives, shrank 0.2 percent, or an annualized 0.7 percent, in the April-June period on a seasonally adjusted basis. It was the fifth consecutive quarter of decline.
The rebound in real GDP in the April-June quarter was led by a recovery in exports, particularly to China, and consumer spending.
Exports rose 6.3 percent from the previous quarter for the first increase in five quarters.
With a total budget of 4 trillion yuan (about 56 trillion yen), the Chinese government expanded domestic demand through economic stimulus measures, including public works projects and subsidies to buy cars and household appliances. The positive effects spread to Asian exporters, including Japan.
Consumer spending, which accounts for more than half of Japan's GDP, increased in the April-June period for the first time in three quarters, apparently led by the government's economic stimulus measures, such as the Eco-Point system for household appliances and tax cuts for purchases of environmentally friendly vehicles.
According to the Cabinet Office, new car sales increased in the April-June period, led by hybrid cars. In the January-March period, new vehicle sales plunged by more than 10 percent from the previous quarter.
However, corporate investments in plants and equipment shrank for the fifth consecutive quarter because of still-uncertain economic prospects.
Housing investments also decreased for the second straight quarter.