“Japan’s exports have fallen by about a third of the levels recorded last year.”
“Factories are running at about a half of their full capacity and analysts are cautioning that the boost provided by Japan’s own stimulus efforts could wane as the year progresses.”
Japan’s economy contracted at a record pace in the first three months of the year, but the rate of decline was less than initial estimates suggested, pushing the Nikkei index through the 10,000 mark for the first time since October.
Gross domestic product (GDP), which is a key measure of a country’s economic strength, shrank by an annualised pace of 14.2 per cent — the worst on record since comparable data were first kept in 1955.
However, today’s revised figure for the first quarter is less than the 15.2 per cent originally reported, sending the Nikkei to 10,022.23 before it closed at 9,981.33.
The revision helped kindle tentative hopes that the worst may be over for the world’s second-largest economy. Japan has benefited from improved demand from its close neighbour China, which is spending $586 billion (£356 billion) on building roads, hospitals and housing as part of a massive fiscal stimulus programme.
Japanese consumer confidence hit a 10-month high in April, while sales of electronic goods have risen by a fifth since the Government introduced a programme designed to encourage shoppers to buy ecologically friendly items.
Honda, the car manufacturer, has also benefited from tax breaks on fuel-efficient cars, with sales rising in the last two months. Bankruptcy rates fell last month for the first time in more than a year.
However, Japan’s exporters are struggling to find overseas buyers for their goods amid a dearth of global demand. Any recovery for the overall economy is expected to be slow.
Japan’s exports have fallen by about a third of the levels recorded last year. Factories are running at about a half of their full capacity and analysts are cautioning that the boost provided by Japan’s own stimulus efforts could wane as the year progresses.
Junko Nishioka, chief economist for Japan at RBS Securities, said: “The first quarter was disastrous, but the worst for the economy has already passed … But a rebound doesn’t guarantee that Japan’s economy will regain momentum.”
Across Asia there were other glimpses of a possible recovery in economic data published today. In China, annual growth of fixed asset investment in urban areas in the first five months of the year rose to 32.9 per cent, compared to 30.5 per cent in the first four months of the year, suggesting that the Government’s stimulus plan is working.
In Australia, official figures showed that only a net 1,700 jobs were lost last month, compared with an expected drop of 30,000.
June 11, 2009
Rhys Blakely
Source: Times Online