Japan’s 2007 First Quarter GDP Growth at Annualized 2.4%

May 17, 2007
By Ken Worsley

Projections for Japan’s 1st GDP growth had varied from 2.2 to 2.7% - with most of the numbers seen by us around the 2.6% mark. Thus, it should hardly have come as a surprise when the Cabinet Office announced that Japan’s GDP had grown at an annualized rate of 2.4% in its preliminary report on 1st quarter GDP growth today. In the fourth quarter of 2006, Japan’s GDP grew at an annualized rate of 5.5% - the largest single-quarter expansion in three years.

Yet, some media sources reported the drop in GDP growth as something of a surprise - though there’s no shame in their trying to grab people’s attention (ok, so maybe there is). The markets and the Bank of Japan, however, hardly seemed surprised. More on that in the next post…

According to the Cabinet Office, Japan’s exporters have cut back on capital spending amid looming fears of a slowdown in the US economy. This month’s GDP growth was led by overseas and private-sector demand, with capital spending having a negative effect on growth. Although capital spending had a net positive effect on GDP growth in the fourth quarter of 2006, it had been on the negative side for the four full quarters preceding that.

Quoted in the Washington Post, Richard Jerram, chief economist for Macquarie Securities in Tokyo, had this to say:

It is a mistake to interpret it as poor figures being a sign of a new trend. Growth seems to be stabilizing at a solid healthy rate, without major fluctuations in either direction.

I sure hope he was talking about Japan.

Filed Under Cabinet Office, Economic Reports, GDP