Japan has joined the short but growing list of developed countries to emerge from recession, its government said Monday, by posting 0.9 per cent economic growth in the second quarter of 2009.
After the global financial crisis struck last year, the world's second-largest economy shrank for four consecutive quarters, its largest decline since Second World War.
But according to new data released Monday, recovering exports and a sweeping stimulus program helped it grow by an annualized growth rate of 3.7 per cent during the three months ending June 30.
Cutting taxes and creating incentives to buy energy-efficient cars and household appliances helped encourage consumer spending. The Japanese government has also promised to spend roughly US$263 billion to stimulate the economy. That includes cash handouts and public spending on infrastructure projects such as reinforcing the country's public schools against earthquakes.
Still, Japan's unemployment rate was 5.4 per cent in June, the highest in six years. And wages fell between April and June.
"When you look at the numbers, the contrast between external demand and internal demand is as clear as night and day," said Hiroshi Watanabe, economist with Daiwa Institute of Research in Tokyo. "With payments falling, it's really hard to expect individual spending to hold up."
Yoshimasa Hayashi, Japan's economy and fiscal policy minister, has warned that "risk factors" remain.
"Production is still at a low level, and worries remain that employment conditions will worsen. So we must watch the downside risks," he said on a national news broadcast.
Private capital investment also fell by 4.3 per cent from the previous quarter, while housing investment dropped 9.5 per cent, according to government numbers.
News of Japan's recovery arrived amid signs the global economy may be improving. The French and German governments both said last week that their economies also emerged from recession in the second quarter.
In spite of such encouraging news, however, poorer than expected consumer confidence in the United States was expected to hurt global markets on Monday.
The University of Michigan released consumer confidence tracking data on Friday that fell short of expectations, BNN's Michael Kane told CTV's Canada AM.
"Although Japan is the second-largest economy in the world, it has been going sideways for so long. They had an entire decade where there was essentially no growth," he said. "The United States is the big question mark."
"Under pressure the way it is, with no clear end in sight for the recession there - that has investors worried."
With files from The Associated Press
