Japanese economy to show slight rise in final quarter
The Japanese economy is expected to show only modest growth in the October-December 2004 period due to a slump in corporate spending and weak consumer demand, economists said.
Japan's economy grew 0.1% in the July-September 2004 period compared to the previous quarter. During the April-June period, GDP (Gross Domestic Product) contracted 0.1%.
While the corporate sector witnessed a further slowdown and declines in exports, the late arrival of the winter season might have caused a drop-off in consumer spending.
Another reason for the anticipated slow growth during the fourth quarter is the decrease in industrial output. Japanese manufacturers continue to cut output as overseas IT demand slows in line with the Chinese and US economies.
In the final quarter, industrial output fell 0.8% from the previous quarter. This is the second consecutive drop in industrial output.
Separately,
Japan's current account surplus rose sharply in December, fuelled by increasing dividend and interest payments from overseas. However, economists anticipate that weak exports will have a negative effect on the economy.
The current account surplus totaled Yen 1.61 trillion (around $15.3 billion) in December. For the whole of 2004, the current account reached a record Yen 18.6 trillion.
Growth in revenues in the income account and an expansion in the trade surplus for the first time in the past two months added to the current account surplus' bottom line.
The Japanese trade balance posted a surplus of Yen 1.3 trillion, up 0.5% year-on-year. Exports rose 8.5% to Yen 5.12 trillion in December, while imports soared 11.6% to Yen 3.8 trillion.
Exports have been a key engine of growth in
Japan's recovery in the past few years, but their recent slowdown has caused economic growth to taper off.