Japan's economy surprises, squeezes out growth of 0.1%

Japan's squeezed out 0.1 percent growth during the October-December quarter, the government said yesterday, in an upward revision of earlier data that had shown a contraction.

The revised numbers show that the economy grew at an annualized rate of 0.5 percent during the quarter ending Dec. 31, and recorded growth after two straight previous quarters of contraction.

The government had said initially that Japan's GDP shrank 0.1 percent during the three-month period from the previous quarter.

The revision underlines the generally optimistic view of analysts and government officials that the world's second-largest economy is on an overall mend after more than a decade of stagnation.

In revised numbers from the Cabinet Office, Japan's economy shrank 0.3 percent on quarter in the July-September period, unchanged from the initial figure. It contracted 0.3 percent in the April-June period, a revision from a 0.2 percent fall given earlier.

Government had played down fears that Japan's economy may be headed to another extended period of slowdown. The economy has recovered on the back of exports to the US and the rest of Asia, although consumer spending has not picked up. Corporate profits have improved, and jobs are slowly coming back.

"The upward revision in the GDP growth was unexpected, yet it is too early to be optimistic toward the economy," said Yasu-nari Ueno, chief market economist at Mizuho Securities in Tokyo, adding that the positive numbers were superficial because domestic demand remained weak.

Meanwhile, Japan's current account surplus contracted a larger-than-expected 28.2 percent in January from a year earlier, the government said yesterday.

The Finance Ministry said the current account -- a broad measure of trade, tourism and investment -- shrank to ¥774.9 billion (US$7.45 billion) in January, before seasonal adjustments.

The current account figure was lower than the ¥864.5 billion (US$8.313 billion) economists surveyed by Dow Jones News-wires had predicted.

The ministry mainly attributed the slide to a ¥34.5 billion (US$332 million) deficit in goods and services, a turnaround from the ¥311 billion (US$2.99-billion) surplus a year ago.

In December, the nation's current account surplus expanded 35.1 percent, thanks to a jump in Japan's goods and services surplus. The rise followed a contraction in November -- the first in 17 months -- that officials blamed on higher global oil prices.

The current account is calculated by determining the difference between Japan's income from foreign sources and payments on foreign obligations, and excludes net capital investment.