Nissan vehicles stand ready to be shipped abroad from a port that has recovered from the earthquake
The economy shrank by an annualised rate of 1.3% in the three
months to the end of June, the Cabinet Office said. It shrank 0.3% from
the previous quarter.
Most forecasters were expecting drops of about 2.6% and 0.9%.
The figures should boost optimism that Japan will emerge from recession.
Bounce back?
Japan's economy has contracted for three straight quarters. A
recession is defined as two consecutive quarters of contraction, or
shrinking economic output.
"The scenario that Japan's economy will get on a recovery
track later this year has not changed," said Yoshikiyo Shimamine of
Dai-Ichi Life Research Institute, adding that growth was given a lift by
car manufacturers restoring production.
The March 11 earthquake and tsunami destroyed large parts of
Japan's north-eastern coast, causing a nuclear crisis at the Fukushima
power plant.
That caused electricity shortages at factories, and disrupted supply chains for many Japanese manufacturers.
Click to play
Japan's economy closer to recovery
However, car companies such as Nissan and Toyota, have restored
their supply chains faster than expected, helping lift output in Japan,
the world's third-largest economy.
Nissan made 1.9% more cars in Japan during June when compared
with the same month a year earlier. Toyota's global production may have
dropped by 9.2% in June, but that was far better than the 49% fall seen
in May.
The BBC's Tokyo correspondent Roland Buerk said the latest
figures showed that "manufacturing is recovering from the disaster
strongly".
"Supply chains broken when factories making critical
components were destroyed are being reconnected," he added. "The stage
is set for Japan's economy to roar back in the July-to-September
quarter."
Growth risks
However, Dai-Ichi Life Research Institute's Mr Shimamine
warned that growth may be hampered by "yen strength and financial
turmoil in the US and Europe".
The yen gained against the US dollar on the news from the
Cabinet Office, while Tokyo's main Nikkei 225 stock index opened 1.6%
higher.
Japan's government has also been
warning of the risks to the recovery. Last week it cut its growth
forecast for the current fiscal year to 0.5% from 1.5%, citing the
lingering impact of the 11 March earthquake and tsunami.
In an effort to help manufacturers and underpin a recovery,
the government and central bank intervened in the currency markets on 4
August to weaken the yen.
A strong yen hurts exporters as it makes Japanese good more
expensive in foreign markets and weakens demand. In the past three
months, the yen has gained 5% against the dollar.
The central bank may now have to do more to keep the yen in check, Dai-ichi Life Research Institute's Mr Shimamine said.
"It is possible the Bank of Japan will take additional steps
to ease monetary policy so that companies can continue capital
investment at home," he added.
No comments:
Post a Comment