11 June 2009 07:25 [Source: ICIS news]
By Pearl Bantillo
SINGAPORE (ICIS news)--Japan’s economy will likely post growth in the April-June period after recording five straight quarterly contractions, but weak exports will keep the road to its sustained recovery blocked, economists said on Thursday.
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The country's industrial output recorded monthly growths in March and April, with shipment of goods showing minimal improvements. Annual numbers still suggested that the economy was still not out of the rut but at least the rate of decline had started to narrow, economists said.
“They already showed a nice bounce in March and April and the schedule for May and June points to further growth,” said David Cohen, Singapore-based chief economist at consultancy firm Action Economics.
“Demand has stopped falling so we will definitely get some stabilization in activity in [the June] quarter,” said Ray Attrill, Australia-based global research director at research company 4castweb.
Much of the expected growth in the April-to-June period would come from inventory building following aggressive cutbacks implemented when demand collapsed, economists said.
Sustaining the production momentum, however, would be difficult given risks that consumption would not budge to buoy the economy up in the second half, they added.
The data on machinery orders declining 12.7% in April from March served to temper hopes of a smooth road to recovery, they said.
“It does underscore that capital spending is weak right now and is not likely to turn around anytime soon,” said Cohen.
Industry profits in
“Corporate investments have been quite bleak and the consumer side has been running negative,” said 4cast’s Attrill.
How the second half of the year would fare “is still much a very brave call at this stage”, he said.
“We may find that the second half of the year [will] prove to be not as good as the second quarter. We are still expecting very weak exports [with no] meaningful pick up in demand in US and
But the region is expected to lead the global economic recovery given its sizeable domestic economies, particularly in
The same would not apply to highly-industrialized
“There is some support from Japan’s fiscal policy and it might get some support from intra-Asian trade, but overall, with the broad export picture and weak consumption, we are likely to see a slightly positive [June] quarter but not necessarily to be followed by [growths in the succeeding quarters],” he said.
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