Japan Q2 GDP Revised Up


Japan's economy grew a revised 0.4 percent in April-June from the previous quarter, more than an initial government estimate, but the strong yen and slowing global growth give policymakers little to cheer about over the outlook.

The government unveiled a package of measures to support the economy but analysts doubt it could have much impact, given Japan has little room for big spending with its public debt twice the size of its economy.

The revised gross domestic product (GDP) translates into annualised growth of 1.5 percent, exceeding an initial reading of 0.4 percent and matching a median market forecast, on stronger-than-expected growth in capital spending.

The data gave little comfort to the government as it grapples with deflation and the strong yen, which hit a fresh 15-year high versus the dollar this week despite the Bank of Japan's monetary easing and threats of currency intervention by policymakers.

Japan's revised second-quarter growth was roughly in line with 1.6 percent annualised growth in the United States in the same period, while its quarter-on-quarter expansion lagged the 1.0 percent result in the 16-nation euro zone.

Capital expenditure rose 1.5 percent in April-June from the previous quarter, more than the preliminary 0.5 percent increase and roughly matching a median market forecast for a 1.6 percent gain.

The BOJ eased monetary policy further at an emergency meeting on Aug. 30, bowing to government pressure for a policy response after the yen's sharp rises.

BOJ policymakers had worried about the harm the strong yen could have on exports and corporate earnings at a regular rate review held earlier in August, although they decided to stand pat to examine how much actual damage the market moves could have on growth, minutes of the Aug. 9-10 meeting showed on Friday.

In a sign that deflation was easing only moderately in Japan's slow economic recovery, wholesale prices were unchanged in the year to August for a second straight month after a 0.4 percent gain in June, BOJ data showed on Friday.


TradingEconomics.com, Reuters
9/14/2010 3:30:56 PM