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Japan Q2 GDP contracts less-than-expected

08-16-2011 09:09 BJT

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Japan's economy contracted for a third straight quarter in the April-to-June period, but at a less-than-expected pace. That's even as consumer spending and factory production continued to suffer in the aftermath of the March earthquake and tsunami.

However, officials are confident the world's third largest economy will recover in the third quarter this year, despite analysts warning a strong yen and gloomy global recovery may cloud the economy just emerging from recession.

Japan's real gross domestic product contracted at an annualized rate of 1.3 percent in the second quarter, compared to a 2.6 percent projection. The Cabinet Office also says GDP fell 0.3 percent quarter on quarter, compared to a 0.9 percent fall in the first three months of the year.

The figures did provide a glimmer of optimism.

Kaoru Yosano, Japanese Economics Minister said, "With increasing investment in public projects relating to reconstruction, we believe the economy is slowly getting back on its feet."

The minister seems more upbeat about the quarterly growth figures, which he says reflect gradual improvement in consumer confidence and industrial production, as supply of parts recovers. He points out, growing public works investment in reconstruction projects is also set to provide further support for the economy.

He said, "With supply chains gradually recovering, as well as the fact that we are likely to see reconstruction-related projects increase, we believe that the latter half of this year will see relatively high growth."

But Finance Minister Yoshihiko Noda says the figures show the nation's economy slumped in wide range of areas and still needs close attention, as the country still sees downside risks - including the problem of the rising yen.

Meanwhile, analysts say because Japanese companies have increasingly relied on overseas markets to drive growth and offset lackluster demand at home, gloomy global growth may be another threat to Japan's economy.

They also say Japan's economy was struggling even before the disaster, as it has faced a slew of problems including years of deflation, a rapidly aging and shrinking population and ballooning public debt.

Editor:Li Wanran |Source: CNTV.CN

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