Japan out of recession

Says who?

Japan rebound might be an opportunity for the Asian

region.

Says who?

Japan's economy grew 0.9 per cent in the three months to

June, ending its longest recession since the Second World

War on the back of exports and government stimulus

spending. But analysts say it will be a long road to a

sustained recovery.

The growth in the world's number two economy is likely to

continue in coming quarters, providing further evidence

that the worst of the damage wrought by a global financial

crisis may be over.

It may also give the ruling party a lift ahead of a

general election, but economists and policy-makers are

wary about the outlook going into next year, which depends

on a recovery in world demand.

The preliminary figure, which fell slightly short of a

median market forecast of a 1pc increase, puts Japan in

the first camp of G7 countries that have pulled out of

recession, along with Germany and France.

"The data was driven by stimulus steps in Japan and

overseas, so Japan's economy is far from self-sustaining

growth," said Barclays Capital chief economist for Japan

Kyohei Morita.

"The growth level for the July-September quarter will

likely be similar to that of April-June, and the pace of

growth is expected to slow down thereafter as the effects

of government stimulus run their course.

It was the first period of growth in five quarters and

follows a revised 3.1pc contraction in January-March and a

3.5pc decrease in the final quarter of last year, which

was the biggest drop on record.

On an annualised basis, Japan's economy grew 3.7pc from

the first quarter, the fastest since January-March last

year. That compared with a 1pc contraction in the US in

the same quarter.

Economists expect Japanese GDP to grow 0.4pc in

July-September from the previous quarter, followed by a

0.5pc increase in October-December, a poll showed. But

economists say the recovery could lose momentum later this

year when a temporary boost from government stimulus

steps, such as one-off payments and subsidies for

energy-efficient cars and home appliances, peters out.

In the April-June period, external demand, the balance of

exports and imports, contributed 1.6 percentage points to

GDP, due in part to China's $585 billion stimulus package

and other such spending rolled out by governments around

the world to combat the global recession.

Tokyo's stimulus steps helped private consumption, which

accounts for about 60pc of the economy, to rise 0.8pc and

public investment to increase 8.1pc. (Quotes of agencies)

Seen from skyscrapers comfortable sofas, Japan's economy

looks like a funny tale. Funny or sad, so sad to see that

financial mood makers claim lots of cra...!