Japan growth slows as exports struggle

Growth in export-driven Japan slowed in the three months to June, official data showed on Monday, with the debt crisis in Europe and the unsteady global economy crimping demand.

Gross domestic product grew a worse-than-expected 0.3 percent in the second quarter from the previous three months, the Cabinet Office said, a fourth straight rise but much slower than the brisk 1.3 percent seen in January-March.

The data came in significantly lower than market expectations for a 0.7 percent increase, as exports slowed and despite a ramp-up in government spending since the March 11 quake-tsunami disaster last year.

The economic growth translated into an annualised 1.4 percent rise, below the market forecast for 2.7 percent increase and sharply slower than the 5.5 percent expansion in the January-March quarter.

Adding to the headwinds being faced by the world's number three economy is the strong yen, which has made the country's exports less competitive in overseas markets.

However, Japanese economic and fiscal policy minister Motohisa Furukawa highlighted the growth of private demand to support his view for continued moderate growth.

"The economy of our country is trending upward, driven by domestic demand," he said in a statement.

"With the employment and earnings environment expected to improve further... the economy is expected to maintain moderate growth for the July-September period and later," he said.

"However, we need to pay careful attention to downward risks for the global economy amid the European fiscal debt crisis."

Private consumption, which accounts for about 60 percent of the Japanese economy, expanded 0.1 percent in the three months, dropping steeply from a 1.2 percent expansion in the previous quarter.

Exports of goods and services rose 1.2 percent during the April-June period, slower than 3.4 percent seen in the previous quarter, the Cabinet Office said.

Imports meanwhile rose 1.6 percent, compared with a rise of 2.2 percent in January-March.

While officials stressed the bright side of the data, private economists sounded concerns as the Chinese economy, which is a key driver of regional growth, suffers a deceleration and stimulus programmes at home begin to expire.

"In general, we can't see any strength in the Japanese economy, which was mainly sustained by government fiscal measures," said Hideki Matsumura, senior economist at Japan Research Institute.

The government has taken a series of steps to spur growth, including offering incentives for fuel-efficient vehicle purchases and measures to rebuild the northern region hit by the deadly earthquake and tsunami.

"If the economy can maintain the current strength, it is likely to mark another growth in the July-September quarter," Matsumura said.

Among factors for future concerns is the auto purchase programme ending likely by early September, Matsumura said.

"The slowing Chinese economy is another concern. The Japanese economy may suffer a contraction in the October-December quarter," he said.

Jun Kawakami, market economist at Mizuho Securities, shared a similar view and voiced concerns for the near future.

"Private consumption is a concern as the government policies that have stimulated it, particularly subsidies for fuel-efficient vehicles, are peeled back," he said.

-- Dow Jones Newswires contributed to this report --

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippine, Vietnam troops play sports on disputed island
    Philippine, Vietnam troops play sports on disputed island

    Filipino and Vietnamese troops played football and tug-of-war on a disputed South China Sea island on Wednesday, officials said, closing ranks as their rival China ramps up construction of artificial islands. The games took place on Philippine-held Northeast Cay, just 2.7 kilometres (1.7 miles) from Southwest Cay which is controlled by Vietnam, where a similar contest was held last year. "It was a navy-to-navy confidence-building engagement," Vice Admiral Alexander Lopez, the Philippine …

  • ‘Inland areas could be exposed to tsunami-like waves’
    ‘Inland areas could be exposed to tsunami-like waves’

    While strong earthquakes cause tsunamis in coastal areas, the Philippine Institute of Volcanology and Seismology (Phivolcs) warned that inland areas could also be exposed to tsunami-like waves, or seiche, if located near or around bodies of water. In a recent earthquake awareness seminar in Muntinlupa, Phivolcs supervising science research specialist Joan Salcedo explained that a seiche is a large wave similar to a tsunami, triggered by strong ground shaking from an earthquake or volcanic …

  • China gives ‘gentle reminder’ to Phl, warns small nations
    China gives ‘gentle reminder’ to Phl, warns small nations

    China gave the Philippines a “gentle reminder” last Tuesday that Beijing will not bully small countries but warned these nations not to make trouble willfully and endlessly. “Here is a gentle reminder to the Philippines: China will not bully small countries, meanwhile, small countries shall not make trouble willfully and endlessly. The Chinese Foreign Ministry also said that China would continue to build other civilian facilities on relevant maritime features in the disputed Spratly Islands …

  • Back-channel diplomacy pushed for Phl-China dispute
    Back-channel diplomacy pushed for Phl-China dispute

    The Philippines should consider backchannel diplomacy to prevent its territorial dispute with China from deteriorating further, Sen. Ferdinand Marcos Jr. said yesterday. There are a lot of Filipino businessmen with businesses in China and they have friends and connections there. Let’s utilize that, ask them to talk to their friends on how we can resolve this matter peacefully,” Marcos said. …

  • Phl, Japan to deepen ties amid China sea claims
    Phl, Japan to deepen ties amid China sea claims

    Japan and the Philippines are set to bolster security ties when President Benigno Aquino visits Tokyo next week, the latest move by Prime Minister Shinzo Abe to beef up cooperation with Southeast Asian nations facing China’s growing naval ambitions. The two sides will likely agree to start talks on a framework for the transfer of defense equipment and technology and to discuss a possible pact on the status of Japanese military personnel visiting the Philippines to facilitate joint training and …

  • Phl, Vietnam troops play soccer on disputed isle
    Phl, Vietnam troops play soccer on disputed isle

    Vietnamese and Philippine troops played soccer and sang karaoke on a South China Sea island yesterday in a sign of the growing security ties between the two Southeast Asian nations most at odds with Beijing over the contested waterway. Cooperation has blossomed between Hanoi and Manila since they shelved decades of enmity over their competing claims in the Spratly archipelago to try to counter China, whose creation of artificial islands in the region will allow it to project power deep into …

  • Noy swears in 50 newly appointed AFP officers
    Noy swears in 50 newly appointed AFP officers

    President Aquino administered yesterday the oath taking of 50 newly appointed generals and officers of the Armed Forces of the Philippines (AFP) in a simple ceremony at the Rizal Hall of Malacañang Palace. …

  • Taiwan’s peace call on claimants of disputed territories welcomed
    Taiwan’s peace call on claimants of disputed territories welcomed

    The US on Tuesday welcomed Taiwan’s call on all claimants to disputed shoals, reefs, rocks and islets in the South China Sea and West Philippine Sea to exercise restraint, refrain from unilateral actions that could escalate tensions, as well as to respect international law as reflected in the United Nations Convention on the Law of the Sea. “With regard to the maritime claims and the claims to sovereignty over land features in the South China Sea, our position is that maritime claims must …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options