Japan: GDP Growth Slows Unexpectedly

August 13th, 2012
in econ_news, syndication

Econintersect:  Preliminary readings indicate the second quarter saw Japan’s GDP growth slow to an annual rate of only 1.4%.  Expectations had been for an expansion breaking-news-130pxof 2.3%.  The second quarter fell far short of the 4.7% annual growth rate of the first quarter of the year.  GDP has been supported by public spending, both for continued recovery from the mega quake and tsunami of March 2011 and to beef up existing infrastructure to increase earthquake resistance.  The negative aspects of the latest report come from weaker exports and weak domestic consumption.  As the recovery and infrastructure spending declines over the coming quarters Japan must find ways to strengthen other areas or face still another period of recession.

Follow up:

A global slowdown, especially the recession in Europe, combined with a strong yen is hampering growth in exports which have been a mainstay of the Japanese economy.  Growth in exports in the second quarter was at a 1.2% annual rate.  Exports had grown by 3.3% in the first quarter.  Consumption was close to unchanged (0.1%) in the second quarter, down from 1.2% growth in the first quarter.

Japan has had a rocky road with GDP fluctuations as shown in the following graph covering quarterly changes for the past ten years.

Click on graph for larger image.

The above graphic shows quarter-to-quarter changes, not annualized changes.  The swings are huge.  The preliminary number for the second quarter 2012 is not included.

John Lounsbury


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