Japanese economy at zero growth
By Yuri Kageyama
Associated Press
TOKYO — Japan recorded zero economic growth in the first three months of 2003, underscoring fading hopes for an export-led recovery and growing fears of a global downturn.
The numbers further dampen hopes that improving economic conditions in Japan would translate into better tourism numbers for destinations like Hawai'i.
The gross domestic product — the value of a nation's goods and services — for the January-March period released Friday by the Cabinet Office were in line with expectations. Economists surveyed by Dow Jones Newswires forecast on average that the economy would show no growth during the quarter.
The report reflects the deep problems of Japan's economy, where stock prices have plunged, people are losing hope and prices are consistently spiraling downward in a deflationary trend, said Hiromichi Shirakawa, chief economist at UBS Warburg in Tokyo.
"It's now beyond a doubt that the problem of deflation is getting worse," he said. "The numbers are totally negative."
Export growth that had led last year's fragile recovery, including a 4.5 percent rise in the final quarter of 2002, slid 0.5 percent in the first quarter of this year. Imports climbed 1.4 percent. Public demand dipped 0.3 percent, reflecting the continuing shrinking in government spending for public works projects.
"Individual spending has remained more or less flat, but exports have fallen," said Katsuki Oda of the Cabinet Office.
For the fiscal year ended March 31, the economy grew 1.6 percent, a recovery from a 1.2 percent contraction in fiscal 2001 and above the government forecast of 0.9 percent growth.
But growth is dwindling. The economy grew 1.3 percent in the April-June quarter of 2002, 0.8 percent in the July-September period and 0.5 percent in the October-December period.
Japan's economy has been in a slowdown for more than a decade, repeatedly racking up back-to-back quarters of contraction in between periods of modest growth.
The economy shrank for three straight quarters in 2001, the nation's worst recession in at least two decades.
The jobless rate has remained above 5 percent for nearly two years, hitting a record high 5.5 percent in January for the third time in half a year — the worst reading in the five decades since the government began keeping such records.
Japan's efforts to correct its fiscal woes have stumbled as manufacturing jobs move to China and companies gradually lose their competitive edge.
The recent outbreak of severe acute respiratory syndrome, or SARS, is likely to further chip away at regional growth as business travel gets canceled, tourism plummets and production in promising markets stalls.
Many companies and politicians are counting on a U.S. recovery to drive growth. But Tokyo share prices are languishing at 20-year lows, pushing down even blue chips such as automakers that are reporting booming profits.
The Japanese government is predicting weak economic growth of 0.6 percent for the fiscal year ending March 31, 2004.
Economy Minister Heizo Takenaka acknowledged that deflation is a serious problem but promised to continue with reforms to get the economy growing again. Proposed reforms include wiping out bad debts at banks and easing regulations to encourage investments and ventures.
"The economy remains flat," he said.
