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Japan's Economy Continues Growth

Japan's Economy Continues Growth
TOKYO, Nov. 11, 2005

(AP) Japan's economy expanded at an annual pace of 1.7 percent in the July-September quarter, the government said Friday, marking the fourth straight quarter of growth on healthy consumer spending and booming trade.

Gross domestic product, which measures the value of goods and services produced in a nation, expanded 0.4 percent from the previous quarter, the Cabinet Office said. An annualized pace measures the growth that would be achieved if the latest on-quarter growth continued for a year.

Friday's data provide further evidence the world's second largest economy is recovering after more than a decade of stagnation, when it had slipped into recession in between periods of inconsistent growth.

"The rise in the numbers shows that growth is on a solid footing," said Ryutaro Kono, chief economist at BNP Paribas in Tokyo.

He said it was especially encouraging that the solid growth came atop even stronger growth the previous two quarters, which tends to send the subsequent quarterly growth down as a statistical backlash. Companies are investing more and hiring more _ and such changes are in turn encouraging consumer spending, Kono said.

Although the yearlong growth was not as powerful as the four quarters of consecutive growth marked in 2003, the July-September reading was slightly better than the average 0.3 percent rise forecast by economists surveyed by Dow Jones Newswires.

"The growth is clearly being driven by internal demand, and that means Japan is recovering on its own," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Securities Co.

Japan has almost always relied heavily on exports to keep growth going, but the latest data show otherwise. If the revival in the global economy continues _ as is expected _ news for Japan's economy could grow even rosier, come Christmas shopping season when overseas buyers are likely to send Japanese exports higher, Fujito said.

Household consumption rose 0.3 percent during the quarter ending Sept. 30, while private sector investment, excluding housing, climbed 0.7 percent. Exports rose 2.7 percent during the quarter, while imports jumped 3.9 percent.

"Economic growth remains strong," said Fumikazu Hida of the Cabinet Office.

Exports and imports were robust in electronic products, while imports also shot up in oil because of soaring crude prices, Hida told reporters.

The government is forecasting GDP growth of 1.6 percent for the full fiscal year ending March 31, 2006, meaning that target can be reached even if the economy shrinks for the rest of the six months, given the growth marked so far.

Although the pace of the growth has slowed in the latest quarter compared to previous quarters, Hida said there were no signs of the rebound fizzling.


LINK: http://www.cbsnews.com/stories/2005/11/11/ap/business/mainD8DQ006G0.shtml