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Economy in Brief

Japan's GDP Slows and Contracts
by Robert BruscaAugust 12, 2008

Officials in Japan have become more worried in recent weeks even saying that they cannot be sure that the economy is not now in recession. It’s GDP for 2008-Q2 tells that story. GDP is declining at a weak 2.4% pace in Q2 (Saar). The Yr/Yr pace of GDP growth has slowed from an already weak 1.4% in 2007-Q4 to 1.2% in 2008-Q1 and now to 1.0% in 2008-Q2.

Private consumption is falling at a 1.9% pace. Gross fixed capital formation is falling at a 6% rate. The investment rate for capital equipment is -0.9% and for housing it’s a very weak -13%. Trade is making a small subtraction from overall growth as imports are dropping at better than a 10% rate as exports are falling at a nearly 9% ate. That results in a GDP subtraction because exports are so much larger than imports in real terms than the smaller percentage decline in exports is still a larger drop in real terms than the drop in imports.

Moreover, domestic demand in Japan is falling at a 2.5% annual rate in 2008-Q2 and is falling year/year for the second quarter in a row. No wonder Japan’s authorities are concerned and stimulus package is being prepared.

Japan GDP
    Consumption Capital Formation Trade  Domestic
  GDP Private Public Gross
Fix
Capital
Plants
&Eqpt
Housing X-M:
lbns E
Exports Imports Demand
% change Q/Q at annual rates of change; X-M is Q/Q change in Bil Real Yen
Q2-08 -2.4% -1.9% 0.3% -6.0% -0.9% -13.0% -0.4 -8.9% -10.7% -2.5%
Q1-08 3.2% 2.8% -1.8% 2.8% -0.2% 18.2% 2.4 14.4% 4.8% 1.4%
Q4-07 2.4% 1.4% 3.4% -2.5% 4.3% -33.8% 1.9 11.1% 3.3% 1.0%
Q3-07 1.0% 0.0% 0.3% -4.2% 2.3% -26.3% 2.5 11.0% -1.2% -1.0%
% change Yr/Yr; X-M is Yr/Yr change in Gap in Bil Real Yen
Q2-08 1.0% 0.5% 0.5% -2.6% 1.3% -15.8% 6.3 6.5% -1.2% -0.3%
Q1-08 1.2% 1.3% 0.7% -3.6% -0.6% -16.6% 7.6 11.0% 2.9% -0.2%
Q4-07 1.4% 1.2% 1.4% -3.8% -0.2% -21.5% 7.2 10.4% 2.3% 0.0%
Q3-07 1.8% 1.8% 0.2% -1.4% 0.4% -11.3% 6.0 8.5% 1.5% 0.6%
5-Yrs 2.0% 1.5% 0.8% 0.5% 4.4% -4.0% na 9.4% 4.3% 1.2%
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