Japan's economic growth slowed in the first quarter as companies restrained investment and exports fell, pressuring Prime Minister Junichiro Koizumi's government to sustain a recovery from the third recession since 1991.
GDP rose 0.1 percent, seasonally adjusted, from the fourth quarter, better than a May 16 estimate of zero growth. The economy grew a revised 0.4 percent in the fourth quarter, the Cabinet Office said in Tokyo.
"The Japanese government needs to revive the economy," Nissan Motor Co. Vice Chairman Takeshi Isayama said in an interview yesterday. "There needs to be a sense of urgency."
Business groups have called on Koizumi to speed spending and cut corporate taxes to boost the world's second-largest economy.
Bank of Japan Governor Toshihiko Fukui is also under pressure to end five years of falling prices. The central bank today announced details of a plan to buy corporate debt, saying it would buy as much as Japanese Yen 1 trillion of asset-backed securities and commercial paper starting next month.
The purchases will give companies an alternative to borrowing from banks crippled by an estimated Japanese Yen 52.4 trillion of bad loans and stimulate the corporate debt market, the central bank said.
The bank is running out of policy tools after cutting rates to zero in March 2001 and flooding markets with trillions of yen.
Japanese exports fell 0.4 percent in the first quarter, less than the 0.5 percent decline estimated in the government's May 16 report, as the prospect of war in Iraq hurt global demand.
Business spending rose 0.7 percent in the first quarter, less than the initial estimate of a 1.9 percent gain.
Overseas sales are falling further as the SARS dents growth in China and other Asian markets, which buy two-fifths of Japan's exports. Overseas sales fell 1 percent in April, another government report said today, reducing Japan's current account surplus.
There are other signs the economy is faltering this quarter.
Industrial production fell 1.2 percent in April as orders for semiconductor machinery and digital cameras slumped. Sales at Japanese retailers dropped for a second month in April.
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