Wednesday, 8 December 2004

Japanese third quarter growth revised downwards

Japan's economy is in danger of stalling.

Data Revision Shows Japan's Economy Grows
Japan's economy grew at an even weaker pace during the quarter ending Sept. 30 than initially reported, according to revised government data released Wednesday. The world's second largest economy grew 0.2 percent in annualized terms from the previous quarter, the new numbers showed, down from the period's 0.3 percent growth rate reported last month...

An earlier report on Japan's leading economic indicator gives little reason to expect much improvement soon.

Key index hints at a slowdown in Japan
Japan's index of leading economic indicators fell below 50 percent for a second month in October, the government said Tuesday, signaling a possible economic slowdown. The index, which measures job offers, consumer confidence and other indicators of future activity, fell to 20.0 percent from 33.3 percent in September, the Cabinet Office said in Tokyo. A reading above 50 percent signals growth in three to six months...

I am not hearing too many economists actually predicting a recession in Japan at the moment. Still, with the US dollar expected to fall further in the near future, the risk of a recession for Japan's export-dependent economy is real. Perhaps the rise in the yen will energise the domestic sector and stimulate consumer spending enough to offset the potential fall in export growth.

However, Morgan Stanley's Andy Xie did warn yesterday on CNBC that Japanese consumer spending is "an eternal dream". And investors need more than a dream to base their investments on.

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