Japan: GDP Wakes Up

May 16th, 2013
in econ_news, syndication

Econintersect:  The Japanese economy has responded to the declining value of the breakingnews130pxyen resulting from the expansionary policies of the Abe government with a sharp rebound in GDP growth to 0.9% for the quarter and 3.5% year-over-year for the first quarter 2013 which ended in March.  The major factors in the growth spurt were increased exports (as measured in yen),  improved domestic consumption and increased government investment which was largely offset by a decline in private investment.  The 3.5% growth was stronger than the 2.7% estimate provided by Bloomberg.

Follow up:

Even as the yen has devalued by approximately 20% +/- against other leading currencies, deflation still holds sway.  The GDP deflater was in negative territory for the 14th consecutive quarter, showing a -1.2% reading.  That puts Japan in an unusual situation right now:  the yen has gained in value at home (domestic deflation) while declining in value precipitously internationally.

After opening higher on the strong GDP print, the Nikkei 225 stock index in Tokyo declined rather sharply, down more than 1% two hours into the trading day.

The following graph from Trading Economics shows the year-over-year GDP growth rates for Japan, but does not include the latest data (+3.5%) announced today.  The 0.1% growth shown for last quarter has been raised to +1.0% and the graph has not been updated for that revisions either.

Click on graph for larger image. Japan-gdp-growth-trading-economics-2013-May




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