Japan's 2nd qtr GDP revised down to annualized 2.3% rise

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TOKYO, Sept. 12 Kyodo -
Japan's economy expanded an annualized real 2.3 percent in the April-June
quarter, with the pace revised downward from an initially reported 3.7 percent
expansion due mainly to a greater fall in capital investment and weaker public
investment, the government said Friday.
The growth in gross domestic product corresponds to an expansion of 0.6 percent
from the previous quarter through March, revised downward from an earlier
announced 0.9 percent rise.
Despite the downward revision, the GDP still marks its first expansion in five
quarters, confirming that the nation's economy is picking up from its worst
recession in decades.
Economic and Fiscal Policy Minister Yoshimasa Hayashi said the GDP downgrading
does not change the government's basic assessment that the economy is showing
signs of improvement while in a difficult situation.
''The economy is facing a crucial test,'' Hayashi told a news conference,
noting that the slower capital investment is worrisome.
''Clouds hanging over the (economic) prospects may have yet to clear,'' he said.
In the latest report for the April-June period, corporate investment fell 4.8
percent from the previous quarter, revised downward from an initially reported
4.3 percent decline, and public investment marked a smaller increase of 7.5
percent than an initially reported 8.1 percent gain.
A drop in private inventory was another factor behind the downward revision,
pushing the GDP down 0.8 percentage point, the largest drop since the
January-March quarter of 1999. It compares with a 0.5 point negative
contribution in a preliminary report.
Consumer spending, which makes up about 55 percent of the Japanese GDP, rose
0.7 percent, compared with a preliminary 0.8 percent increase.
Domestic demand, made up of these components, sent the GDP down 1.1 percentage
points in total, larger than an initially reported 0.7 point negative
contribution.
In contrast, demand from overseas sent the GDP up 1.6 points, unchanged from
the preliminary report, as exports rose 6.4 percent, revised up from a
preliminary 6.3 percent growth.
Following revisions to the past GDP data, the period when the nation suffered
the worst economic contraction was changed from the previously reported
October-December quarter of 2008 to the January-March quarter of 1974, when the
GDP fell an annualized 13.1 percent.
In the revised report, the GDP fell at the second-fastest pace of 12.8 percent
during the October-December period of 2008, and marked the third largest drop
of 12.4 percent in the January-March period this year.
Masaaki Kanno, chief economist at JPMorgan Securities Japan Co., said the
latest report underscored that the recent economic improvement is largely
backed by a rebound in exports.
''Overseas demand was strong, but domestic demand was poor with capital
investment remaining weak, though consumption marked small growth,'' he said.
But the worst is already over and the pace of decline in capital investment is
likely to slow going forward, contributing to a gradual recovery in domestic
demand later this year, he added.
The GDP deflator, a key inflation gauge, climbed 0.5 percent from a year
earlier, unchanged from the initial report.
On a nominal basis, or without adjustment for price changes, the economy
contracted 0.5 percent in the April-June period from the previous quarter, or
an annualized 2.1 percent, against a 0.2 percent decrease, or annualized 0.7
percent shrinkage in the preliminary report.
The GDP is the total value of goods and services produced domestically. Real
GDP figures are adjusted for price and seasonal variations.
==Kyodo