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Q3 growth accelerates 3.9% in Japan
By Tomoko A. Hosaka |
November 16, 2010, Tuesday
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Print Edition
Print Edition
JAPAN'S growth accelerated in the July-September quarter thanks to robust consumer spending, offering a rare piece of positive economic news that is likely to prove fleeting.
All signs indicate that the uptick is temporary, and momentum will almost certainly fade as slowing exports and a persistently strong yen take a toll on the world's No. 3 economy. Japan will be lucky if it can eke out growth in the fourth quarter.
Real gross domestic product expanded at an annualized rate of 3.9 percent over the three-month period, marking the fourth consecutive quarter of growth, the Cabinet Office said yesterday.
The result outpaced Kyodo news agency's average market forecast for an annualized 2.6 percent increase and beats a revised 1.8 percent expansion in the April-June period. On a quarterly basis, the annualized figure translates to 0.9 percent growth from the previous three months.
Japan benefited from higher spending by businesses and consumers, who rushed to buy eco-friendly vehicles before government incentives expired. Unusually high temperatures drove sales of summer drinks and clothes, while tobacco demand jumped as smokers stocked up on cigarettes ahead of an October 1 tax hike.
Private consumption, which accounts for about 60 percent of GDP, rose 1.1 percent from the previous quarter, the figures showed. Capital investments by companies climbed 0.8 percent.
Economists warn, however, that because one-time factors fueled last quarter's numbers, the vigor is unlikely to last.
Slowing global demand is undermining exports and factory production, while a strong yen continues to batter companies' bottom lines. The unemployment rate is still high by Japanese historical standards, hovering around 5 percent. Meanwhile, deflation continues to stymie growth.
Exporters like auto makers, which have driven Japan's recovery, are particularly vulnerable to currency fluctuations. When the yen climbs, they lose. A strong yen shrinks the value of their overseas earnings when brought back to Japan and makes their products more expensive in foreign markets.
The figures showed that China maintained its hold as the world's No. 2 economy. Japan's nominal GDP came to US$1.372 trillion compared with China's US$1.415 trillion, the Cabinet Office said.
All signs indicate that the uptick is temporary, and momentum will almost certainly fade as slowing exports and a persistently strong yen take a toll on the world's No. 3 economy. Japan will be lucky if it can eke out growth in the fourth quarter.
Real gross domestic product expanded at an annualized rate of 3.9 percent over the three-month period, marking the fourth consecutive quarter of growth, the Cabinet Office said yesterday.
The result outpaced Kyodo news agency's average market forecast for an annualized 2.6 percent increase and beats a revised 1.8 percent expansion in the April-June period. On a quarterly basis, the annualized figure translates to 0.9 percent growth from the previous three months.
Japan benefited from higher spending by businesses and consumers, who rushed to buy eco-friendly vehicles before government incentives expired. Unusually high temperatures drove sales of summer drinks and clothes, while tobacco demand jumped as smokers stocked up on cigarettes ahead of an October 1 tax hike.
Private consumption, which accounts for about 60 percent of GDP, rose 1.1 percent from the previous quarter, the figures showed. Capital investments by companies climbed 0.8 percent.
Economists warn, however, that because one-time factors fueled last quarter's numbers, the vigor is unlikely to last.
Slowing global demand is undermining exports and factory production, while a strong yen continues to batter companies' bottom lines. The unemployment rate is still high by Japanese historical standards, hovering around 5 percent. Meanwhile, deflation continues to stymie growth.
Exporters like auto makers, which have driven Japan's recovery, are particularly vulnerable to currency fluctuations. When the yen climbs, they lose. A strong yen shrinks the value of their overseas earnings when brought back to Japan and makes their products more expensive in foreign markets.
The figures showed that China maintained its hold as the world's No. 2 economy. Japan's nominal GDP came to US$1.372 trillion compared with China's US$1.415 trillion, the Cabinet Office said.
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