Japan remains ahead of China as the world’s number two economy after a solid 1.1% rise in 4th quarter GDP.
Japan posted nominal gross domestic product of about $US5.1 trillion last year, the government announced yesterday.
China reported last month nominal GDP of about $US4.9 trillion in 2009.
At this rate, China will go past Japan around the third quarter of this year.
Japan’s economy grew 1.1% in real terms (in line with forecasts) for the quarter, or 4.6% on an annual basis.
Domestic demand added 0.6 percentage points to growth, while external demand — exports minus imports –added 0.5 percentage points.
And that surge in exports can be put down to the recovery in China, which is helping boost demand for Japanese products, from cars, to steel, to chemical, consumer electronics and parts.
Imports remained down, a better indicator of the true state of the economy.
But the third quarter saw another huge revision, to zero growth, from 1.3% annual, which was down from the first estimate of 4.8%.
Seasonally-adjusted growth for July through September had initially been estimated at 1.2% quarter-on-quarter, but this cut of 0.3% in December (1.3%) and yesterday’s report said there had been no growth at all.
That made the December quarter look very strong, when, if the original estimate had been maintained, there would have been no change (but it still would have been solid growth).
According to the Financial Times as a result of that first revision downwards, the Japanese Government has launched a broad review of how it measures and reports economic output.
The tweak was given to yesterday’s 4th quarter GDP figures.
The FT said that if successful, the reworking of the GDP figures and their collection and compilation should make it easier for analysts to monitor the health of one of the world’s second biggest economy.
The change involves re-working the impact of the sharp fall in exports on the December quarter of 2008, trying to make business investment estimates more accurate, and increasing sample sizes and timeliness in other figures.
The changes could take up to three years.
Now to see if there’s another revision in around six week’s time when the second estimate will be made public.
Japan’s growth (at first estimate) was significantly better than the 0.1% growth in the eurozone in the same period, thanks to a sharp fall in German growth to zero in the December period.
The Japanese parliament’s last week approved for a 7.2 trillion yen ($US80 billion) package that extends incentives to purchase energy-efficient cars and appliances.
That will help the still struggling car sector where Toyota and to a lesser extent, Honda, are grappling with bad publicity from model recalls.
The Government said business spending rose 1.0% — the first gain since the first quarter of 2008.
Public investment fell 1.6%, showing the easing impact of government stimulus measures.
The Bank of Japan meets this week and is expected to leave its benchmark interest rate unchanged at 0.1%, with investors focusing on whether it will extend some of its liquidity-boosting steps.
It needs to do something, the country is being strangled by deflation.
The GDP deflator, a broad indicator of price trends, fell to a record low 3.0% year-on-year decline in October-December, from a 0.6% decrease in the previous quarter.
Even though official interest rates are 0.10%, the GDP deflator boosts that to a crippling 3.1%.
