Posted on 09/12/2005 7:04:58 PM PDT by snowsislander
SEPT. 12: Japan’s economy grew at a 3.3% pace in the second quarter, triple the initial estimate, adding to investor confidence in the recovery after Prime Minister Junichiro Koizumi won a landslide election victory.
The estimate, released by the Cabinet Office on Monday in Tokyo, compares with an August 12 estimate for a 1.1% annualised pace of expansion. Spending by businesses increased 3.6% from the 2.2% initially estimated. Growth in the world’s second-largest economy averaged 4.6% in the first half, the fastest in 15 years.
Japanese stocks gained as an accelerating economy and the election victory increased optimism that Koizumi will be able to sell state assets, cut government debt and give companies a bigger role in spurring growth. Higher business spending may lead to a sustainable recovery after four recessions since 1991, economist Jesper Koll said.
‘‘Corporate Japan is investing in Japan,’’ said Koll, Tokyo-based chief economist for Japan Merrill Lynch & Co. ‘‘Companies like Toshiba and Canon are building factories here in Japan. That is what’s creating the growth that is also going to create lasting employment.’’
The Nikkei 225 stock average rose to its highest since June 2001, jumping 1.6% to 12,896.43 at the close. Ten-year bond yields added 2.5 basis points to 1.365%. The yen was little changed at 109.77 per US dollar at 4:53 p.m. in Tokyo, from 109.68 on September 9 in New York.
Sustained Growth
Capital expenditure accounted for about 50% of Japan’s first-half expansion. Companies plan to keep spending for the rest of the year, according to the Bank of Japan’s July Tankan survey. It showed manufacturers plan to increase spending 16.2% in the year ending March 31, 2006. The next survey is due October 3.
It is the first time since 1991 that a recovery is being fueled by consumer and capital spending, not exports and government money. From the previous quarter, the economy expanded 0.8%. It grew 2.1% compared with the same quarter a year ago.
Exports rose 2.9% on the quarter, compared with the initial estimate of 2.8%. Imports climbed a revised 1.5% from 1.6%. Consumer spending rose 0.6% in the quarter, down from the initial estimate of 0.7%.
Capital Spending
The median estimate of the 18 economists surveyed by Bloomberg News was for the economy to expand at a 1.5% annualised pace. The revision in today’s report was the largest since the second quarter of 2003, when growth was revised to 4.7% from 1.3%, the government said.
Japan’s GDP data is often subject to revisions because some components are incomplete when the preliminary estimates are published. Capital spending figures in the initial GDP estimate only reflected about 40 percent of all spending by companies. Canon, the world’s biggest maker of photocopiers, and Toshiba, said on August 22 they will jointly invest 20.8 billion yen to open a research center next July to develop cheaper production technology for flat panel displays.
The Organization for Economic Cooperation and Development last week raised its forecast for Japan’s economic growth this year to 1.8% from 1.5%.
Ohhhhhhh Nooooooo! They'll buy up all our real estate and drive up the cost of hotel rooms and fill our towns with funny little tourists and run our car companies out of business and .... finance our national debt.
Good for them, it's about time! :-)
Don't tell our sensei, Willie Green-san!
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