Japan’s Economy Grows 3.8%, Less Than First Estimated


Japan’s economy expanded less than initially estimated in the fourth quarter as companies pared spending and stockpiles as deflation deepened.

Gross domestic product rose at an annual 3.8 percent pace, slower than the 4.6 percent reported in preliminary figures last month, the Cabinet Office said.

The economy grew 0.9 percent in the fourth quarter from the previous three months, slower than the 1.1 percent first reported.

The report suggests business spending remains the weak link of an economic recovery that has begun to spread from exporters to households. Renewed demand in Asia is helping Japanese companies such as Canon Inc. and Honda Motor Co., which may minimize an economic slowdown in the coming months as government stimulus measures fade.

Private inventory shaved 0.1 percentage point from growth, after the initial report showed it added to GDP, the main reason for today’s revision.

Capital spending rose 0.9 percent in the three months through December from the previous quarter, compared with a 1 percent increase estimated last month.

About a third of factory capacity is sitting idle and falling prices are squeezing profit margins, prompting companies such as Sony Corp. to cut costs to protect their earnings.

The government has been providing incentives to buy energy- efficient cars and home appliances. Prime Minister Yukio Hatoyama unveiled a 7.2 trillion yen stimulus package in December. Consumer spending, which makes up about 60 percent of the economy, climbed 0.7 percent, unchanged from the initial report, the government said today.

The drop in the GDP deflator, the broadest measure of prices in the economy, was the largest since comparable data were made available in 1955. The government initially reported a 3 percent decline in the gauge.

The government’s options to combat falling prices have been limited by its swelling debt burden, the largest in the industrialized world.

Still, some companies are benefiting from rebounding demand in Asia, particularly China, the world’s fastest-growing major economy and Japan’s biggest overseas market.

Exports increased 5 percent from the previous quarter, unchanged from the preliminary figures. Net exports, or shipments minus imports, added 0.5 percentage point to growth, the same as last month’s reading.

Some reports for January indicate the export revival is filtering to workers. The unemployment rate dropped to a 10- month low of 4.9 percent and wages climbed for the first time in 20 months.


TradingEconomics.com, Bloomberg
3/10/2010 9:22:16 PM