Japan's Economy Loses Steam in April-June

Tokyo, Aug. 16 (Jiji Press)--Japan's economy managed to expand for
the third straight quarter in April-June but shows growing signs of slowing
down as the country's stimulus measures petered out, government data showed
Monday.
In the first quarter of fiscal 2010, seasonally adjusted gross
domestic product rose a meager 0.1 pct quarter on quarter in price-adjusted
real terms, following the 1.1 pct growth in January-March, the Cabinet
Office said in a preliminary report.
At an annual rate, Japan's GDP grew only 0.4 pct in April-June, far
lower than an average forecast of 2.2 pct growth among 11 economic research
institutes polled by Jiji Press and the 4.4 pct growth in January-March.
Keisuke Tsumura, parliamentary secretary for economic and fiscal
policy at the Cabinet Office, said at a press conference that revised data
may show negative growth. The revised April-June GDP data are set to be
released on Sept. 10.
National Policy Minister Satoshi Arai said at a separate press
conference that it is necessary for the government to pay attention to
downside risks to the Japanese economy.
In nominal terms, the April-June GDP fell 0.9 pct from the previous
quarter for annualized decline of 3.7 pct, the government agency said. The
comparison of real and nominal data showed that Japan is back in deflation
for the first time in two quarters.
In real terms, personal consumption increased 0.03 pct after rising
0.5 pct in the previous quarter, posting the fifth consecutive quarter of
growth.
But the pace of increase slowed as the government's incentive
programs to promote purchases of eco-friendly vehicles and energy-efficient
electric appliances appear to have peaked. As the number of product items
covered by the eco-point program was reduced in April, sales of flat-panel
display television sets decreased.
Corporate capital expenditures rose 0.5 pct in April-June, up for
the third straight quarter, as higher exports prompted manufacturers to
boost production.
Meanwhile, housing investment fell 1.3 pct and public investment
also dropped 3.4 pct.
Exports gained 5.9 pct, buoyed by robust shipments of construction
machinery to Europe. Imports increased 4.3 pct.
Domestic demand made a negative 0.2-percentage-point contribution
to the quarter-on-quarter real GDP rise of 0.1 pct.
Conversely, external demand, or exports minus imports, made a
0.3-point positive contribution to the GDP growth.
The GDP deflator, a comprehensive measure of prices, fell 1.8 pct
year on year.
Japan's economy is showing clear signs of slowing down, said
Mitsumaru Kumagai, senior economist at the Daiwa Institute of Research.
The pace of economic growth will slow amid the tepid performances
of Chinese, U.S. and European economies, but Japan's economy is unlikely to
suffer a clear double-dip recession and instead grow by at around zero pct
for the time being, Kumagai said.
Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co.,
said that the April-June GDP data suggest that the economy showed a recovery
led by external demand.
Looking ahead, Kodama said that the Japanese economy is expected to
take a pause in recovery due to a U.S. economic slowdown but will be
underpinned by personal consumption stimulated toward the year-end by the
government's distribution of allowances for child-rearing families.


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