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Japan’s economy leaves recession
Tokyo, Aug 17 (Agencies):
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Published on 18 Aug. 2009 12:37 AM IST
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Japan has come out of recession after its economy grew by 0.9% in the April-to-June quarter. The growth comes after four consecutive quarters of contraction. Correspondents say that the rise is due to a huge government stimulus package and it is unclear whether the momentum will be sustained. Recent figures show other economies coming out of recession, including Germany, France and Hong Kong, a sign the global slowdown is easing. Despite Japan exiting recession, the country’s main share index, the Nikkei, fell back as the rate of growth was not as large as analysts had hoped. If Japan’s latest quarterly rate were maintained for a full year, the economy would grow 3.7%, but this was less than market expectations of 3.9%. The Nikkei ended down 329 points or 3.1% to 10,269. Appetite for Japanese cars is slowly recovering around the world, thanks to government schemes to encourage people to replace their old vehicles. Toyota has narrowed its full-year loss, and its smaller rival Honda has raised its forecast for the year. Overall Japanese exports grew 6.3% in the second quarter from the previous three months. That’s reduced stockpiles of goods, and encouraged firms to start producing again. Overall industrial output increased 8.3% in the three months to June. Consumers are also starting to spend thanks to the stimulus package worth $260bn. But people are still losing jobs. The unemployment rate continues to rise, and is expected to hit a record 5.8% next year. That is why analysts say it will be a long road to a sustained recovery. Japan growth fails to lift optimism Japan officially fell into recession last year and there was a dramatic fall in growth in January-March as the world economic slowdown hit Japanese exports hard. Massive government stimulus measures helped to boost the economy, including cash handouts and subsidies to buy energy efficient cars and home appliances, the BBC’s Roland Buerk in Tokyo says. Manufacturers also benefited from recovering demand in China and other markets. But Japan could still face a long road to sustainable recovery, our correspondent says. Junko Nishioka, chief economist at RBS securities, told Reuters the latest figure was “very good”. “The positive contribution of public spending is likely to continue, so I don’t think there will be a return to [contraction], as feared by some,” the economist added. The slowdown in the US has hit it hard as American consumers have limited their spending. In a recent Bank of Japan report, the central bank underlined its cautious view of the economy. While it said conditions in the Japanese economy had stopped worsening, it warned that unemployment would stay high and consumer spending low. Last month, the bank forecast that Japan’s economy would shrink by 3.4% in the 12 months to 31 March 2010. The French and German economies both grew by 0.3% between April and June, bringing to an end recessions in Europe’s largest economies that have lasted a year. Analysts had not expected the data, suggesting recovery could be faster than previously expected. And Hong Kong recorded growth of 3.3% in the three months from April to June. That data was also better than had been expected, with the government subsequently increasing its forecast for growth in the whole year.

 
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