Japan’s Q1 growth revised upwards

| June 10, 2010
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Official data today revealed Japan’s annualised economic growth expanded in the first quarter at an annualised rate of 5%, higher than the initial estimate of 4.9%.

On a quarterly basis, however, the reading remained unchanged at 1.2%, according to the Cabinet Office.

Japan was one of the first major economies to emerge from recession in the second quarter of 2009 – boosted by the country’s dependence on exports.

Exports, particularly to emerging Asian markets such as China, are fuelling Japan’s recovery, surging 40.4% in April on year, according to the latest figures from the Finance Ministry.

However, the world’s second largest economy continues to battle with deflation.

Japan’s core consumer price index, which excludes volatile fresh food prices, fell 1.5% in April from a year ago – representing the 14th straight month of decline and larger than a 1.2% fall in March.

Deflation (where prices fall rather than increase) can be a serious threat to an economy because it deters consumers and businesses from spending in expectation of falling prices.

Japan has battled with deflation in the past and was a problem for the economy during its so-called “Lost Decade” in the 1990s in which the economy struggled with falling prices.

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