Econintersect: Japan had a second consecutive quarter of economic growth for the January-March 2012 quarter, with GDP increasing at a 4.1% annual rate (1% during the quarter). This growth was an improvement on the revised 0.1% growth rate in the fourth quarter of 2011. Japan has now had three consecutive quarters of GDP growth which have followed three declining quarters immediately preceding. The three most recent gains (totaling 3.1%) still have not recouped the three previous declines (totaling 4.0%). And the latest GDP number is still 7.6% below the level for 4Q/2007.
The revised GDP for 4Q 2011, which was barely positive at +0.1%, reversed what had previously been the third of four negative quarters for 2011. The revision came from a preliminary reading of -0.6%, so the annualized revision was 2.8%, which is a huge change between a preliminary and a final reading.
According to the Financial Times the GDP spike is temporary:
Much of the growth came from the reintroduction of government incentives to buy fuel-efficient cars, due to expire in August, and from the beginning of earthquake-related reconstruction activities in the Tohoku area. As those twin boosts fade, growth may tail off toward the end of the year.
“This is a short-term, cyclical lift,” said Masamichi Adachi, economist at JPMorgan in Tokyo, before the data were released.
Some of the headwinds faced by the Japanese economy in the coming quarters include weak demand for their exports, constrained production due to power shortages after the entirety of the country’s nuclear facilities shut down (see GEI News) and a reduced level of domestic consumption indicated by consumer price deflation that has been occurring in recent months.
- Japanese GDP grows 1% in first quarter (Ben McLannahan, Financial Times, 17 May 2012)
- Japan’s GDP Declines in Fourth Quarter (GEI News, 13 February 2012)
- Japan Now Without Nuclear Power (GEI News, 4 May 2012)
- GDP Data for Japan (YCharts)