TOKYO, Mar 13 (AFP): Japan's strong economic growth was revised down a notch for the fourth quarter of 2005 while the current account surplus shrank for the first month in five in January, the government said Monday. The world's second-largest economy grew 1.3 per cent in the three months to December and at a 5.4 per cent annualised rate, the Cabinet Office said. The government had originally estimated 1.4 per cent growth in gross domestic product (GDP) or 5.5 per cent on an annualised basis. Despite the downward revision, the data showed that the Japanese economy continued to recover after a slump stretching back over a decade, with a fourth straight quarterly expansion. Japan's economy grew almost five times faster than that of the United States, which saw 1.1 per cent annualised growth in the same period. "Real GDP growth remained the clear leader among advanced economies," noted Morgan Stanley economist Takehiro Sato. "The latest data also highlights new inventory build-up by companies in response to steady domestic and overseas demand. This suggests that the economy should maintain a solid growth pace for the time being," he added. Investors reacted with relief that the downgrade was not as large as some had feared, giving a lift to Japanese share prices which closed 1.53 per cent higher, buoyed also by gains on Wall Street and a weaker yen. The strong fourth quarter has raised hopes that Japan is finally on a solid road to recovery after being stuck in a rut for over a decade after the bursting of the 'bubble economy' in the early 1990s. Last week, the Bank of Japan ended its unusual five-year emergency policy of flooding the financial system with cash to provide virtually free credit, reflecting a return to normality for the economy as deflation fades. Meanwhile the surplus in the current account, the broadest measure of trade in goods and services, declined 7.6 per cent in January from a year earlier to 719.1 billion yen (6.05 billion dollars), the finance ministry said. The figure was above market expectations for a surplus of about 640 billion yen. The trade account alone, however, registered a deficit of 209.4 billion yen in January, compared with a surplus of 332.3 billion yen a year earlier. This is the first trade deficit since January 1985 when the ministry started the current method of calculation. "Trading conditions are worsening which is a negative factor for Japan but exports are healthy as well," said Yuji Shimanaka, an economist at Mitsubishi UFJ Research and Consulting. "It won't affect the Japanese economy very adversely for now," he added. Historically, Japan has run a large surplus in the current account, which measures the flow of goods, services and investment income from overseas. Recently high oil prices, however, have been inflating the value of imports for Japan, which has to buy most of its energy supply from the Middle East. Exports rose 13.1 per cent to 4.76 trillion yen in January, up for a 26th straight month, while imports jumped 28.1 per cent to 4.97 trillion yen, the 23rd consecutive monthly increase. The capital and financial account, which measures international fund flows, registered an outflow of 1.22 trillion yen for the month, against an outflow of 851.1 billion yen a year before.
|