Japan Economic Recovery May Grind to Halt in Early 2010

Tokyo, Jan. 4 (Jiji Press)--Japan's economic recovery may grind to
a halt in early 2010 as effects from government stimulus are expected to
wane.

Japan "can avoid a double dip" into recession thanks mainly to
increasing exports to China, Economic and Fiscal Policy Minister Naoto Kan
says.
But the impact of the government's "eco-point" shopping program
designed to promote purchases of energy-efficient home electronics and other
stimulus steps are seen tailing off in coming months.
In addition, public works expenditures are set to be cut under the
budget for fiscal 2010 starting in April.
Japan has been on a recovery track since spring last year. But the
level of its economic activity is expected to remain low this year as
deflation is persisting while the job market has not shown any clear sign of
recovery.
According to the International Monetary Fund, Japan is expected to
give up its status as the world's second biggest economy this year. In terms
of nominal gross domestic product, China is seen exceeding Japan.
For fiscal 2010, the Japanese government expects the country's
economy to grow 1.4 pct in price-adjusted real terms and 0.4 pct in nominal
terms.
The average estimates among 16 private think tanks put real growth
at 1.3 pct and nominal growth at 0.1 pct.
The forecasts show that Japan will enjoy its first economic growth
in three years in both real and nominal terms. But the nominal growth rate
will remain weaker than the real growth rate for the 13th consecutive year,
a sign of deflation.
Some think tanks, including the Japan Research Institute, forecast
that Japan will fall into negative growth in early 2010.
The yen's strength and protracted deflation may dampen corporate
earnings further, which would in turn cause wages to fall further and weigh
on consumer spending even more.
Following are the 16 think tanks' GDP growth forecasts for fiscal
2009 and 2010 in percentages, with nominal figures in parentheses:

FY 2010 FY 2009
Shinkin Central Bank Research Institute 1.7 (1.4) -2.8 (-4.0)
Daiwa Institute of Research 1.7 (1.0) -2.8 (-4.3)
Barclays Capital Japan 1.7 (-0.1) -2.5 (-5.2)
Fukoku Mutual Life Insurance 1.6 (0.5) -2.7 (-4.1)
Meiji Yasuda Life Insurance 1.5 (0.7) -2.7 (-4.4)
Fujitsu Research Institute 1.4 (1.2) -2.6 (-3.9)
Dai-ichi Life Research Institute 1.4 (0.4) -2.6 (-3.9)
Norinchukin Research Institute 1.4 (0.3) -2.9 (-4.6)
Shinko Research Institute 1.4 (0.0) -2.5 (-4.2)
NLI Research Institute 1.4 (-0.2) -2.9 (-3.8)
Mitsubishi UFJ Research & Consulting 1.3 (0.1) -2.6 (-3.6)
Mitsubishi Research Institute 1.2 (0.0) -2.7 (-4.4)
Nomura Securities Financial 1.2 (-0.3) -2.8 (-4.2)
& Economic Research Center
Mizuho Research Institute 1.0 (-0.5) -2.8 (-3.8)
BNP Paribas Securities (Japan) 1.0 (-1.2) -2.6 (-4.7)
Japan Research Institute -0.1 (-2.5) -3.0 (-4.9)
---------------------------------------------------------------
Average 1.3 (0.1) -2.7 (-4.3)
Govt Forecasts 1.4 (0.4) -2.6 (-4.3)