Japan's economy contracts
Japan’s economy shrank in the April-June quarter, and the first such decline in nine months was blamed on weak capital investment, the government said Monday.
The quarterly data announced by the Cabinet Office were a 0.3 percent drop in real terms from the January-March quarter, representing a contraction of 1.2 percent on an annual basis.
An official blamed weaker-than-expected capital investment for returning the gross domestic product to the negative column, Kyodo news service reported. He said private consumption and exports also lost steam during the quarter.
The report said the data may revive concerns about the outlook for the economy but also end concerns of an interest rate hike by the Bank of Japan next week.
Kyodo said the 1.2 percent annualized drop was the highest since the 1.4 annualized percent decline in the January-March period of 2003.
Japanese Finance Minister Fukushiro Nukaga struck an optimistic note, saying companies, encouraged by high profits, plan to boost capital investment in the current fiscal year.
For the growth momentum to continue, the economy must achieve an annualized rate of 2.7 percent during all of the remaining three quarters of fiscal 2007 to meet the government’s 2.1 percent target. // Copyright 2007 by United Press International
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