Japan grew by an annualised 0.5 per cent in the three months to December, according to revised gross domestic product numbers released on Monday, suggesting that the economy may have emerged from a shallow recession earlier than thought.
Preliminary GDP estimates had suggested that the economy shrank by an annualised 0.5 per cent in the December quarter, marking a third quarter of shallow decline.
Richard Jerram, economist at Macquarie Securities in Tokyo, said the revision said more about the notorious volatility of Japanese GDP numbers than about the real state of the economy.
But he added that it tended to confirm the growing view that the economy was now in the third leg of a stop-and-start recovery that began in early 2002.
“Technically the economy was now not in recession in the fourth quarter of 2004,” said Mr Jerram. “But realistically the economy was probably not in recession in 2004 at all,” he added, referring to the view that the economy hit a “soft patch” rather than a full blown recession last year.
The government has insisted that the economy will pick up again this year on the back of robust demand for Japanese exports from the US and China and higher wages at home. Mostly strong production, jobs and spending data for January and February have tended to confirm its view.
Subsequent revisions to GDP numbers could conceivably push one of the two other negative quarters of 2004 into positive territory, eliminating the technical recession altogether.
Monday's positive revision came from a combination of stronger than expected government consumption, a positive contribution from private inventories and a lower figure for imports.
Other figures released on Monday showed Japan's current account surplus shrank 28.2 per cent in January and 12.2 per cent on a seasonally adjusted basis, largely on rising imports. Japan's imports bill has risen partly because of high oil and other commodity prices.