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TOKYO: Japan grew by an annualised 0.5 per cent in the three months to December, according to revised gross domestic product (GDP) numbers released, of late, indicating that the economy may have emerged from a shallow recession earlier than thought.
Preliminary GDP estimates had suggested the economy shrank by an annualised 0.5 per cent in the December quarter against the previous three months, marking a third quarter of shallow decline.
Richard Jerram, economist at Macquarie Securities in Tokyo, said the revision indicated more about the volatility of Japanese GDP statistics than about the real state of the economy.
Nevertheless, he said, it tended to confirm the growing view that the economy was into the third leg of a stop-and-start recovery that began in early 2002.
"Technically the economy was not in recession in the fourth quarter of 2004," said Jerram. "But realistically the economy was probably not in recession in 2004 at all," he added, referring to the view that the economy hit a "soft patch" rather than a full blown recession last year.
The government has insisted that the economy will pick up again this year on the back of robust demand for Japanese exports from the US and China and higher wages at home. A stream of strong production, jobs and spending-data for January and February has tended to confirm its view.
Of late, the government revised up industrial production for January to 2.5 per cent month-on-month. That compared with an already strong original estimate of 2.1 per cent, one of the first signs that economic life might be slowly returning.
Subsequent revisions to GDP numbers could conceivably push one of the two other negative quarters of 2004 into positive territory, eliminating the technical recession altogether.
Peter Morgan, economist at HSBC, said: "We had very strong growth in early 2004, so basically the economy was taking a breather after previously unsustainable growth. The latest data seem to show that we are improving again."
Morgan said Japan was still dependent on exports for most of its growth. "But the global environment remains fairly supportive," he said. "We have continued strong growth in the US and China has had no landing." Even oil prices had not risen sufficiently to have a decisively negative impact, he said, although a $10 rise in oil prices would shave some 0.45 per cent off GDP.
Separately, bankruptcies fell in February from a year earlier, the 26th straight month of decline, according to Teikoku Databank, a research company.
That marked the second-longest run of improvement since the second world war, although Teikoku said that might have more to do with government support for struggling small businesses than an improved climate. Other figures released recently showed Japan's current account surplus shrank 28.2 per cent in January and 12.2 per cent on a seasonally adjusted basis, largely on rising imports.
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