Japan faces a major set back as its economic growth lacerate to record low 2.4 percent amid worries about the decreasing trade with United States.
US is Japan’s biggest export market, and recent decline might leave many Japanese multinational companies in a limbo. However, many economists assure that there is no need to worry, as Japan’s overall growth is still healthy and seems to be stabilizing. The gross domestic product figures, released by the government, also came after an unusually strong October-December quarter, when the economy surged ahead at a 5 percent annual pace.
Chief economist for Macquarie Securities in Tokyo Richard Jerram said
It is a mistake to interpret it as poor figures being a sign of a new trend, as growth seems to be stabilizing at a solid healthy rate, without major fluctuations in either direction
Economists are not convinced with the report at all, but do not rule out the possibility to discourage any immediate interest rate hike, but would not derail the Bank of Japan from pursuing future increases. Just hours after the figures were released, the central bank announced that bank is keeping its benchmark rate at 0.50 percent.
Economists argue that consumer spending increases in the first quarter, which accounts for more than half the economy. It climbed 0.9 percent from the previous quarter, but the area of concern is the pace of expansion, which relatively slowed too, from 1.1 percent in October-December.
Declined exports prove a blessing in disguise for the nation’s economy as it helped to increases business investment in the country, which shoots up by 3.3 percent. Business investment had dropped in the January-March quarter to 0.9 percent, but now it is showing upward trend.
However, gaining much from the increasing investment, but the declining exports is worrisome for the economy in the long run. Japan can’t ignore market like US, as US market is a biggest market in itself for the Japanese product than the any other markets.
Image: kansascity
Via: mercurynews
