Friday, March 8, 2013
DJ: GDP Turns Positive, Current Account Still In Red
TOKYO--Japan's economy pulled out of its 2012 downturn faster than previously estimated, according to revised GDP data released Friday, providing a tailwind to the government's pro-growth policies.
The government said GDP rose at a price-adjusted 0.2% in annualized terms in the fourth quarter, up from the previous reading of a 0.4% contraction. That follows annualized declines in the April-June and July-September periods.
The fact that Japan has pulled out of its third recession in 10 years sooner than expected shows Prime Minister Shinzo Abe in an even stronger position as he tries to improve growth in the world's third-largest economy.
"A recovery of the Japanese economy will become clear going forward," said Masamichi Adachi, senior economist at JPMorgan Securities Japan Co.
The revision was due largely to a smaller drop in corporate capital expenditures than initially reported, as well as to a small increase in private consumption.
Mr. Adachi added, however, that signs of a recovery wouldn't change the Bank of Japan's committment to wrest the nation out of 15 years of deflation.
"The traditional BOJ would take easing steps when the economy was getting worse. The thinking, however, has completely changed. The BOJ will ease, whether the economy is getting better or bad, until it can bring about an inflation."
The improvements haven't been enough, however, to end a string of bad trade figures. Other data released Friday showed the third straight month of shortfall in Japan's current account as the country's trade balance deteriorated.
Japan's trade balance has worsened over the past two years due to the impact of the strong yen and a rise in fuel imports following the March 2011 nuclear crisis. Only two of the country's 50 nuclear reactors are currently operating due to safety concerns.
Though a weakening in the yen is supposed to eventually give the figures a long-term lift by making Japanese exports cheaper abroad, economists say the impact of more expensive imports, particularly energy, will initially inflate the deficit.
Expectations for aggressive monetary easing under new leadership at the Bank of Japan that takes over at the end of the month has pushed the yen to its weakest levels in three and a half years. The dollar was at Y95.02 as of 0200 GMT in Friday Asian trading.
The current account deficit came to Y364.8 billion in January before seasonal adjustments, the government said, after a Y264.1 billion deficit in December. The current account is the broadest measure of what Japan earns from trade and cross-border investment.
Though it was stronger than the Y626.0 billion ($6.6 billion) gap expected by economists, MOF officials said a technical factor concerning Japan's debt forgiveness of Myanmar added Y158.5 billion to the January figure.