Pace of Ja­pan’s eco­nomic growth will halve in fis­cal 2011

The Pak Banker - - International -

TOKYO: The pace of Ja­pan's eco­nomic growth will halve in fis­cal 2011 from this year as a stim­u­lus-driven shop­ping rush eases and ex­ports fall on a strong yen and softer de­mand, the govern­ment said Wed­nes­day.

In its out­look re­port, the Cabi­net Of­fice also said con­sumer prices will stop fall­ing but will not rise, deal­ing a blow to Prime Min­is­ter Naoto Kan's stated goal of end­ing de­fla­tion in the year. Re­cent year-on-year falls in the con­sumer price in­dex will halt in the mid­dle of next year, the Cabi­net Of­fice said, but sug­gested this would not rep­re­sent the de­feat of chronic de­fla­tion in the econ­omy. Growth is fore­cast to slow to a real 1.5 per­cent from 3.1 per­cent in this year, the re­port said. Govern­ment stim­u­lus mea­sures helped boost do­mes­tic pro­duc­tion and con­sump­tion in the cur­rent year, in­clud­ing sub­sidy pro­grammes for pur­chases of en­vi­ron­men­tally friendly ve­hi­cles and ap­pli­ances. Ja­pan's econ­omy grew 4.5 per­cent in the Ju­lySeptem­ber quar­ter, am­pli­fied by a rush by car buy­ers to use ex­pir­ing sub­si­dies and smok­ers who stocked up on cig­a­rettes ahead of a tax hike dur­ing the pe­riod. The hottest sum­mer on record also drove sales of items such as air con­di­tion­ers, help­ing spur growth in the quar­ter. Pri­vate con­sump­tion ac­counts for around 60 per­cent of gross do­mes­tic prod­uct.

How­ever, an­a­lysts warn of a con­trac­tion in the fourth cal­en­dar quar­ter as the re­moval of such one-off fac­tors high­lights Ja­pan's ex­po­sure to a weak­en­ing ex­port pic­ture and slow do­mes­tic de­mand.

At a cabi­net meet­ing, Kan noted "con­cern about de­clines in the Oc­to­ber-De­cem­ber quar­ter" and said now was "a cru­cial time to se­cure eco­nomic re­cov­ery", Chief Cabi­net Sec­re­tary Yoshito Sen­goku told a news con­fer­ence Wed­nes­day. -Afp

TOKYO: Fac­tory work­ers check as­sem­bled Prius hy­brid ve­hi­cles at a Toy­ota Mo­tors fac­tory in Aichi pre­fec­ture. The pace of Ja­pan's eco­nomic growth will halve in fis­cal 2011 from this year as a stim­u­lus-driven shop­ping rush eases and ex­ports fall. -Afp

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