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GDP up on government spending

August 18, 2009
By Ken Worsley


Despite the 0.9% rise in GDP over the April-June quarter, there remain some skeptics worried about how strongly Japan will be able to recover from multiple quarters of negative growth. The Nikkei published an article yesterday entitled “Jobs Weakness Could Slam Brakes On GDP Growth, Economists Fear“. The Nikkei puts it simply: “For Japan, the biggest challenge is whether the stimulus measures can create sufficient private-sector demand to trigger a self-sustaining economic recovery.” Of course, this is impossible, as stimulus measures are temporary and mainly serve to increase national debt.

While the government stimulus package has spurred the economy to some degree, we also know that about 290,000 full-time jobs and 470,000 temporary jobs have been lost over the past year. There were 760,000 fewer people employed in the April-June quarter against a year ago.

We also know that capital investment is projected to see its greatest fall on record in the current financial year.

Quite simply, April-June GDP figures relied on a boost from a government that has little left to spend. With official unemployment approaching its all-time high of 5.5% and an increasing number of workers being hired on part-time or temporary contracts, boosts in domestic spending and capital expenditures seem more and more like a pipe dream.

Filed Under Business, GDP, Labor and Wages 

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Comments

One Response to “GDP up on government spending”

  1. Sofia Wilson on August 20th, 2009 2:43 pm

    TOKYO: Japan’s economy grew 0.9% in April-June thanks to a rebound in exports and government stimulus, snapping a four-quarter contraction, the country’s longest recession in modern history.
    The 0.9% growth in real gross domestic product (GDP) in the April-June quarter was the biggest rise since a 1.0% increase in January-March 2008.

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