Japan growth crawls in Q2
Tuesday, August 14, 2007
JAPAN said yesterday its economy grew at a tepid 0.5 per cent annualised pace in the second quarter of this year, slowing sharply as exports and consumer spending lost steam.
The world's second-largest economy, which is in the midst of its longest post-war recovery, expanded for a 10th straight quarter, helped by brisk spending by companies on new plant and equipment.
But the sharp slowdown further dampened expectations that the Bank of Japan might raise its super-low interest rates next week, particularly in light of recent financial market turmoil sparked by the US housing sector woes.
"Growing concerns for a negative impact on the economy from the US sub-prime lending woes through market instability could lead the BoJ to hold off on a rate hike until September," predicted Morgan Stanley economist Takehiro Sato.
Japan's gross domestic product (GDP) grew by just 0.1 per cent in the three months to June as the economy hit the brakes after the first quarter's 0.8 per cent expansion, figures from the Cabinet Office showed.
The figures fell well short of analysts' expectations for quarter-on-quarter growth of 0.3 per cent and an annualised rate of 1.0 per cent.
Concerns grew about sluggish consumer spending and slowing exports to the United States.
Private consumption growth cooled sharply to a rate of 0.4 per cent quarter-on-quarter from 0.8 per cent in the previous term, while export growth weakened to 0.9 per cent from 3.4 per cent.
Consumption slowed amid worries about higher local taxes, "but looking at the growth figures I say the economy keeps a steady undertone," said Tatsushi Shikano, an analyst at Mitsubishi UFJ Research and Consulting.
"The economy still showed growth ... and the consumption was steady. But in financial markets the outlook is unclear. This will make it unlikely for the central bank to go for an interest rate hike this month," said Shikano.AFP
The world's second-largest economy, which is in the midst of its longest post-war recovery, expanded for a 10th straight quarter, helped by brisk spending by companies on new plant and equipment.
But the sharp slowdown further dampened expectations that the Bank of Japan might raise its super-low interest rates next week, particularly in light of recent financial market turmoil sparked by the US housing sector woes.
"Growing concerns for a negative impact on the economy from the US sub-prime lending woes through market instability could lead the BoJ to hold off on a rate hike until September," predicted Morgan Stanley economist Takehiro Sato.
Japan's gross domestic product (GDP) grew by just 0.1 per cent in the three months to June as the economy hit the brakes after the first quarter's 0.8 per cent expansion, figures from the Cabinet Office showed.
The figures fell well short of analysts' expectations for quarter-on-quarter growth of 0.3 per cent and an annualised rate of 1.0 per cent.
Concerns grew about sluggish consumer spending and slowing exports to the United States.
Private consumption growth cooled sharply to a rate of 0.4 per cent quarter-on-quarter from 0.8 per cent in the previous term, while export growth weakened to 0.9 per cent from 3.4 per cent.
Consumption slowed amid worries about higher local taxes, "but looking at the growth figures I say the economy keeps a steady undertone," said Tatsushi Shikano, an analyst at Mitsubishi UFJ Research and Consulting.
"The economy still showed growth ... and the consumption was steady. But in financial markets the outlook is unclear. This will make it unlikely for the central bank to go for an interest rate hike this month," said Shikano.AFP
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