Prime Minister Kevin Rudd is due to meet the Japanese Prime Minister later today.
It may be the first meeting the Japanese PM has with a foreign leader after the expected success of a censure motion in the country’s Upper House which is expected to be voted upon late Wednesday night.
Any move by the opposition parties to force a vote (which they will win) on the censure motion will further add to the confusion in parliament.
The Democratic Party of Japan, which controls the upper house, has grabbed a controversial new health policy change that lifts the cost of care for Japan’s 12 million 75 year old people, while lowering it on others, especially some wealthy voters.
If the vote happens and is pressed home it will be the first in Japan’s history; it’s likely the government will ignore it because the vote is non-binding, but it again raises the question about the governance of the country at a time of rising economic pressures.
These pressures were highlighted by the surprising news that the Japanese economy grew at 4% in the March quarter. That’s faster than previously reported, but analysts in Tokyo continue to point out that unreliable Japanese economic statistics make it hard to know what the real situation is.
But they do know that oil and fuel costs are rising, as are food costs and inflation generally, while the slowdown in the US and European economies has cut growth in exports in the past six months.
First quarter GDP growth rose because businesses spending was higher than first estimated.
According to the Japanese Cabinet Office which releases these figures (introducing an unwanted political note) GDP rose by an annual 4% in the quarter, compared to the first estimate of a 3.3% rise.
Growth in the March quarter was 1% up on that in the three months to the end of December. That compares to the first estimate of 0.8% growth in the quarter (Australia’s was 0.6%).
Analysts said the reason for the change was the 0.2% rise in business spending, compared with the first estimate last month of a fall of 0.9% in the quarter.
The Japanese Finance Ministry last week said that companies lifted spending by 1.3% in the quarter, but that profits fell by more than 17% from March last year which was the biggest fall in seven years.
The same Finance Ministry survey showed that factory output fell in April, while unemployment rose, leading analysts to suggest that the Japanese economy has slowed to a walk. But the latest reading on GDP growth in the March quarter questions that belief.
But analysts say the recent strength of the yen (which is now weaker thanks to the rise in the value of the US dollar in the past week to a three month high against the yen) and especially the surge in oil prices, have tipped the economy into a slowdown.
The Japanese sharemarket rose for the first time in a couple of days on the news, but especially the slide in the value of the yen.
Economists warn that the 4% annual figure is about twice the annual rate the economy has been growing at since 2002, and that’s why they find it hard to believe.
That’s why they will take heart from the narrowing of Japan’s big current account surplus in April.
Figures from the Ministry of Finance show the surplus fell by 30% in the month to 1.38 trillion yen (or $A13.1 billion) from a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 29 economists surveyed by Bloomberg News was for the gap to decrease to 1.63 trillion yen.
Imports jumped by 13.4% in April, against the 13.2% rate in March and much of the rise came from the surge in the prices of oil (especially), coal, iron ore, food and other imports as higher prices started under new financial year contracts (Japan runs an April to March financial year).
Exports rose 4.9%, up faster than the 2.8% rise in March. (Figures out last week showed shipments to the US fell 9.1% fell in April from a year earlier, the eighth monthly decline.)
