Japan’s economy at the beginning of this year slid into reverse for the first time in two years, hit by sluggish consumption and a winter cold snap, but analysts predicted the world’s third-largest economy would quickly rebound.
The economy contracted 0.2 percent quarter-on-quarter in the January-to-March period, compared with growth of 0.1 percent at the end of last year, the Japanese Cabinet Office said yesterday.
This brought to an end a series of eight consecutive quarters of growth, but experts said that they expected a pause in the growth trend rather than a prolonged downswing.
“There were one-off special factors in the January-March period, ranging from stock market sell-offs to higher vegetable prices due to bad weather,” Norinchukin Research Institute chief economist Takeshi Minami said.
The yen also strengthened against other major currencies on safe-haven buying, clouding the prospects for Japanese exporters.
“There are worries about some emerging economy markets, but the global economy as a whole is likely to continue its recovery for some more time. [Japan’s] GDP will likely come back to positive growth in April-June,” Minami said.
The economy was stalled by stagnant private consumption, which was flat in the January-to-March period after an uptick of 0.2 percent in the final quarter of last year.
Private residential investment also plunged another 2.1 percent after a 2.7 percent fall in the previous quarter.
Exports of goods and services slowed in the period, rising 0.6 percent compared with an increase of 2.2 percent in the previous three months.
However, despite the broad-based slowdown, Minami said the economy would remain solid.
“If you look at the Bank of Japan’s Tankan survey released in April, business confidence was unshaken, with corporate investment plans remaining solid,” he said.
However, SMBC Nikko Securities Inc chief market economist Yoshimasa Maruyama warned that private consumption was weak, even when the special factors were taken into consideration.
Consumers will keep purse strings tight “unless the pace of wage increases shows a clear acceleration,” Maruyama said in a commentary published ahead of the data release, despite the yen’s drop against the US dollar, which often boosts the Japanese stock market, as a weak currency is positive for exporters.
Stock market traders appeared to be disappointed by the data.
The benchmark Nikkei 225 lost 0.44 percent, or 100.79 points, to close at 22,717.23, while the broader TOPIX ended down 0.27 percent, or 4.80 points, at 1,800.35.
The US dollar was changing hands at ￥110.26, marginally down from ￥110.33 in New York on Monday afternoon, but up from less than ￥110 earlier in Tokyo.
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
Vanguard International Semiconductor Corp (世界先進) and Episil Technologies Inc (漢磊) yesterday announced plans to jointly build an 8-inch fab to produce silicon carbide (SiC) chips through an equity acquisition deal. SiC chips offer higher efficiency and lower energy loss than pure silicon chips, and they are able to operate at higher temperatures. They have become crucial to the development of electric vehicles, artificial intelligence data centers, green energy storage and industrial devices. Vanguard, a contract chipmaker focused on making power management chips and driver ICs for displays, is to acquire a 13 percent stake in Episil for NT$2.48 billion (US$77.1 million).
RSS