Japan Economy to Lose Momentum from July-Sept.: Economist

Tokyo, Aug. 11 (Jiji Press)--The Japanese economy is likely to
suffer from a lack of momentum in July-September and beyond, after posting
positive growth for the first time in five quarters in April-June, according
to a Japanese economist.
In a recent interview, Susumu Takahashi, vice chairman of the Japan
Research Institute, said the economic growth will become almost zero in the
current quarter as there is little hope for a recovery in domestic and
external demand.
Exports, which have improved to some extent, are unlikely to see
further growth in July-September chiefly due to the yen's appreciation
against other currencies, Takahashi said.
Takahashi's think tank projects Japan's real gross domestic product
for April-June to grow by an annualized 6.4 pct quarter on quarter,
following a record 15.2 pct contraction in January-March.
The Cabinet Office is scheduled to release the GDP figures for the
first three months of fiscal 2009 on Monday.
The bullish estimate for April-June is attributed mainly to a
recovery in industrial production, a rebound in exports and improvement in
personal consumption induced by government tax breaks for purchases of
eco-friendly vehicles, Takahashi said. But the GDP growth will be
short-lived, he added.
Looking ahead, Takahashi said the economy will be pressured by
three factors--excessive levels of employment, capacity and supply.
It is necessary to strike a balance between external and domestic
demand to ensure a solid recovery in the Japanese economy, Takahashi said.
The focal point is whether the economy will be able to capitalize
on strong demand in emerging economies, including those in Asia, Takahashi
said.
Takahashi said a rise in domestic demand hinges on revitalizing
regional economies through cooperation among various sectors, including the
environment, energy and agriculture.
In addition, growth in medical services, nursing care, education
and personnel training would create domestic demand and contribute to a
full-fledged economic recovery, he said.
But Takahashi warned of a second downturn of the Japanese economy
in case of slow recovery in the European and U.S. economies, a renewed rise
of crude oil prices, and the combination of the yen's appreciation against
the dollar and rising U.S. and European long-term interest rates.