Japan Economy Grows 3.7%


Japan's economy grew a more-than- estimated 3.7 percent last quarter as exports to Asia and emerging markets helped companies weather a U.S. slowdown.

Gross domestic product in the three months ended Dec. 31 accelerated from a revised 1.3 percent annualized expansion in the third quarter, the Cabinet Office said today in Tokyo.

Toyota Motor Corp. and other exporters are relying on consumers in Asia and emerging economies to make up for slower demand in the U.S., Japan's largest export market. Companies expect demand to moderate this year. Advantest Corp. and Omron Corp. slashed sales forecasts last month as manufacturers cut orders for equipment in anticipation of weaker global demand.

Rising oil prices also may have boosted the figure adjusted for inflation. The GDP deflator, a broad measure of prices used to derive real growth from nominal, fell 1.3 percent from a year earlier, the biggest drop since the first quarter of 2006. Oil prices are subtracted from the deflator. Dubai crude, a benchmark for Asian refiners, rose by a fifth in the quarter.

Today's report reduced speculation of an interest-rate cut by the Bank of Japan, which starts a two-day policy meeting in Tokyo today. The central bank will keep the key overnight lending rate at 0.5 percent tomorrow, according to all 42 economists surveyed by Bloomberg News.

From the previous quarter, the economy expanded 0.9 percent. The U.S. economy grew 0.2 percent in the fourth quarter, slower than the 1.2 percent in the previous three months. The European Union expanded 0.3 percent, less than half the pace of the previous period, economists expect a report to show today.


TradingEconomics.com, Bloomberg
2/13/2008 6:13:32 PM