Published: Friday September 11, 2009 MYT 9:19:00 AM
Updated: Friday September 11, 2009 MYT 1:23:34 PM

Japan Friday revised down 2Q GDP to 2.3% (update)

TOKYO: Japan's growth in the second quarter was weaker than initially thought, but government figures still show that the world's second largest economy has managed to climb out of a recession.

The Cabinet Office said Friday that gross domestic product, or the value of the country's goods and services, grew at an annual pace of 2.3 percent in the April-June period, following a yearlong contraction.

Preliminary data had said the economy grew at an annualized rate of 3.7 percent during the quarter.

The weaker numbers largely came from worse private sector inventory adjustments and investments, according to revised government data.

On a quarterly basis, the economy grew 0.6 percent on quarter, revised from an earlier 0.9 percent rise.

Japan appears to be joining Germany, France and other economies in gradually recovering from the global financial crisis.

But economists warn the recovery remains fragile and mostly based on improved exports while consumer spending remains dismal.

"Risk factors remain for the winter months, including the possibility that consumer spending will fall because of the flu," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.

Yamamoto expects moderate growth to continue for the rest of the year but warns the momentum of growth could ease.

Recovery in April-June was driven by robust demand for exports such as video recorders and other electronics goods on strong shipments to China and other emerging markets.

Government stimulus measures also helped, such as cash handouts for ecological products.

But the impact of such measures is likely to run out of steam when incentive programs end.

Salaries are falling and the unemployment rate has risen to a record-high 5.7 percent as companies such as Toyota Motor Corp. and Sony Corp. cut thousands of jobs.

The last time Japan's economy eked out growth was in the first quarter of last year.

It marked a deep contraction in the last quarter of 2008, shrinking at an annual rate of 12.8 percent - the second worst plunge on record.

The worst-ever decline was racked up in January-March quarter of 1974, when Japan was sorely hurt by surging oil prices, according to the government.

The GDP data follows a Thursday report on machinery orders, a closely watched indicator of corporate capital spending, which dipped in July after rising the previous month, suggesting the outlook remains murky.

Data showed core private sector machinery orders plunged 9.3 percent from the previous month to the lowest level since the government started compiling data in 1987. - AP

Earlier report

TOKYO: Japan's economy grew less in the second quarter than initial estimates.

The Cabinet Office said Friday that gross domestic product, or the total value of the country's goods and services, grew at an annual pace of 2.3 percent in the April-June period, according to a revised figure.

A preliminary report had said GDP grew at an annualized rate of 3.7 percent during the quarter. - AP

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