TOKYO — Japan officially emerged from the recession in the second quarter, according to official government data released Monday, but market watchers remain cautious on their outlook for the world’s second largest economy.
Japan’s gross domestic product increased 0.9 percent in the April to June period from the previous quarter, expanding at an annualized rate of 3.7 percent and growing for the first time in five quarters, the country’s Cabinet Office said. The figure came in slightly lower than economists’ expectations for 1 percent quarterly growth and 3.9 percent annualized growth. Last week, data from France and Germany showed that both of those countries have also emerged from recession, defined as two consecutive quarters of economic contraction.
The government said second-quarter exports in Japan spiked 6.3 percent while imports slid 5.1 percent. Even though exports of electronics and cars drive much of Japan’s economy, news of the pickup failed to lift the stock market. Instead, the Nikkei 225 index slid 3.1 percent on Monday to close at 10,268.61 as investors digested discouraging consumer confidence data from the U.S. and fresh fears about the weakening of the U.S. dollar against the yen.
Maiko Noguchi, senior economist with Daiwa Securities SMBC in Tokyo, said she thinks growth will remain at “relatively high levels” through the third quarter but will decelerate after that.
“Given firms’ production outlook, growth is likely to slow down in and after Q4,” Noguchi said. “The decline in income, particularly in bonuses, and further employment adjustments by corporations may become a drag on consumer spending.And there is no sign of bottoming out in capital spending.”
As reported, department stores, luxury goods companies and other retailers here have been suffering as consumers curtail their spending. Cheap fast-fashion chains like Hennes & Mauritz, Fast Retailing Co. Ltd.’s Uniqlo and Forever 21 are notable exceptions and thriving in the current climate. [For more on the burgeoning market in fast fashion, see story, this page.]
Japan’s economic health is sure to weigh heavily on the minds of voters as they head to the polls for a general election on Aug. 30. Prime Minister Taro Aso and his ruling Liberal Democratic Party are extremely unpopular, according to opinion polls. They are expected to lose to the Democratic Party of Japan, a centrist but slightly more left-leaning party led by Yukio Hatoyama.
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Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
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