Wed, Sep 09, 2015 - Page 15 News List

Revised data show Japan contracted by 1.2% in Q2

AP, TOKYO

Workers operate machinery in a container area at a port in Tokyo yesterday.

Photo: Reuters

Japan’s economy contracted 1.2 percent year-on-year in the April-to-June quarter, according to revised data released yesterday, as economists warned China’s slowdown and financial market turmoil might weaken an expected recovery in the second half.

The figure was better than last month’s preliminary estimate of a 1.6 percent contraction, but economists said the general trend is weak.

“The details were hardly reassuring,” Capital Economics’ Marcel Thieliant said in a commentary.

Corporate investment fell 0.9 percent.

He expects growth to be positive but tepid in the current quarter.

Public investment and private residential investment were the strongest areas of growth in the April-June quarter.

Revisions to tax laws led many property owners to raze old houses for reconstruction, helping boost housing starts.

However, other areas such as auto registrations and industrial production have been lackluster. China’s slowing growth has also cast a pall on the outlook for exports in coming months.

“We recognize the downside risk to our growth forecast, with continuing disappointing news from Asian neighbors and recent market turmoil,” JPMorgan Chase & Co Tokyo-based economist Masamichi Adachi said in a research note.

He said he still expects the economy to recover in the second half of the year.

“In all, we continue to think that domestic demand is firming, but external demand may be weaker than we currently anticipate,” he said.

FLAT DOMESTIC DEMAND

Domestic demand was essentially flat in the April-June quarter.

On a quarterly basis, the economy contracted 0.3 percent versus the earlier estimate of a 0.4 percent contraction.

The government hopes to boost growth through inflation, but sluggish wages and exports have frustrated that effort.

Employee compensation fell by 0.2 percent in the April-to-June quarter.

Japan’s fiscal year begins in April, so public spending tends to be highest in the spring, as construction projects resume or get underway.

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