Japanese Economy Rebounding

Japan's economy has expanded for the first time in four quarters due to a rise in exports, Corolla Financial reports. End Quote

(1888PressRelease) November 22, 2011 - Japan's economy expanded for the first time in four quarters as exports recovered from a record earthquake, an expansion that is already slowing because of weakening overseas demand. Gross domestic product grew at an annualized 6.0 percent in the three months ending Sept. 30, the fastest pace in a year and a half, the Cabinet Office said today in Tokyo. The median forecast of 26 economists surveyed by Bloomberg News was for a 5.9 percent increase. Japan's return to growth after three quarters of contraction was driven by companies including Toyota Motor Corp making up for lost output from the March disaster. The rebound is already showing signs of waning as the yen's climb to post- World War II highs and Europe's deepening fiscal woes threaten the outlook for exports.

On a quarterly basis, gross domestic product grew 1.5 per cent in July-September, the data showed. Japanese GDP data is subject to constant revision, however. Improving exports were the biggest contributor to GDP growth in the third quarter, a government official said, followed by private consumption. On a quarterly basis, exports were 6.2 per cent higher, or up 27.4 per cent on an annualised basis. Private consumption gained a quarterly 1.0 per cent, or 3.9 per cent annualised. Marking the highest growth in a year and a half and slightly above economists' expectations, the price-adjusted GDP figure released by the Cabinet Office on Monday reassured investors and helped lift Tokyo stock prices by 1.1% to 8603.70.

Japan's economy was dragged into a recession after the earthquake, which caused severe damage to the northeast of the country. It also damaged factories and disrupted supply chains. However, the latest figures show that exports are improving, helping economic growth pick up. Net exports accounted for just over a third of the growth in the third quarter, according to the Cabinet Office data. Analysts warned that the third quarter surge could be a one-off due to the size of the drop after the earthquake, while a strong yen and a downturn in overseas export markets has clouded the outlook for Japan's fragile recovery. The disasters left 20,000 people dead or missing, devastated large areas of the northeast and sparked a nuclear crisis at the Fukushima nuclear plant. The damage and devastation brought by the tsunami also shattered crucial component supply chains, forcing companies to shut down factories, slowing the nation's output and exports as the economy tipped into recession. While Japan's producers have raced to restore output more quickly than expected, there are concerns that effort could be undermined by a strong yen that erodes repatriated profits, as demand wanes amid a global economic slowdown.

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