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Wed, May 18, 2005 - Page 12 News List

Consumer spending lifts Japan's growth

BETTER THAN EXPECTED Growth for the January-March period beat expectations, but economists said a true recovery isn't likely until toward the end of the fiscal year


A jump in consumer spending helped lift Japan's economy to its fastest growth in a year during the January-March quarter, but analysts and officials cautioned yesterday that the numbers reflect a technical rebound from a previous quarter hampered by natural disasters.

Japan's GDP, the value of goods and services produced in a nation, grew 1.3 percent, or an annualized pace of 5.3 percent, in the quarter from the previous quarter, the Cabinet Office said.

But the better-than-expected numbers show a technical rebound from the October-December quarter, which was hurt by one-time factors such as an unusually mild winter that curbed spending on clothing and typhoons that pushed up vegetable prices, Fumikazu Hida of the Cabinet Office told reporters.

Real recovery ahead

"The numbers look much better than reality," said Junichi Makino, economist at Daiwa Institute of Research in Tokyo, noting declining exports and rising inventory were reasons for concern.

"A true recovery isn't likely until toward the end of this fiscal year," Makino said.

During the quarter that ended March 31, exports were down 0.2 percent, while private consumption rose 1.2 percent and company investments were up 2.0 percent.

For the fiscal year ended March 31, the economy expanded 1.9 percent, below the government's target of 2.1 percent growth and slightly weaker than the 2.0 percent rise in fiscal 2003.


Economy Minister Heizo Takenaka was upbeat about the economy.

"The data back up the view that the economy is in a broad recovery," he told reporters.

"There's no change to our view that the economy will escape a lull toward the middle of this year," he said.

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