UPDATE 1-Japan Q4 GDP shows economy still in recession, pick-up eyed

Wed Feb 13, 2013 7:16pm EST

Related Topics

* Q4 GDP -0.1 pct vs forecast +0.1 pct in Reuters poll
    * Capex, exports weigh on growth
    * Recovery eyed as exports likely to recover

    By Kaori Kaneko and Leika Kihara
    TOKYO, Feb 14 (Reuters) - Japan's economy contracted for the
third consecutive quarter in  October-December, showing the
country is struggling to escape from a mild recession and adding
weight to the new government's push for radical policy steps to
revive growth.
    Gross domestic product (GDP) fell 0.1 percent in
October-December from the previous quarter, compared with the
median forecast of 0.1 percent expansion, according to a Reuters
poll.
    The data is unlikely to affect the outcome of a Bank of
Japan policy meeting that ends later in the day.
    Looking to kickstart the economy and end two decades of
deflation, Prime Minister Shinzo Abe plans to combine the
country's biggest stimulus spending since the financial crisis
with aggressive monetary policy easing.
    "Data show that overseas economies are recovering, so we
expect Japan to return to growth in the first quarter. A weak
yen will also help exporters," said Shuji Tonouchi, senior fixed
income strategist at Mitsubishi UFJ Morgan Stanley Securities.
    "The economy is still on the recovery track, and there is a
stimulus package that will help from the spring. The Bank of
Japan is also likely to continue monetary easing."
    
    Economics Minister Akira Amari said while the economy was
still showing some weakness, it was likely to resume moderate
recovery helped by monetary easing, stimulus spending and an
expected pick-up in global growth.
    On an annualised basis, the economy contracted 0.4 percent,
Cabinet Office data showed on Thursday. Economists had expected
a 0.5 percent annualised increase.
    Private consumption rose 0.4 percent from the previous
quarter versus the median forecast for a 0.5 percent increase.
    Capital expenditure fell 2.6 percent, more than the median
estimate for a 1.8 percent decline, marking the fourth straight
quarter of decline.
    The Bank of Japan is expected to keep monetary policy steady
and may revise up its assessment of the economy on Thursday, as
the yen's recent declines and a pick-up in global demand offer
some relief to the export-reliant economy.
    Japan is expected to stress at a Group of 20 meeting this
week that its push for aggressive monetary easing is intended to
beat deflation and not designed to devalue the yen.
    A $117 billion stimulus package is likely to pass parliament
in coming weeks.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.