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