The growth rate of Japan’s gross domestic product for the April-June quarter of fiscal 1998 is likely to fall from the previous quarter, raising the possibility that the economy may shrink for the third quarter in a row since the October-December quarter of fiscal 1997, according to estimates by many private think-tanks.
On Friday, the Economic Planning Agency will announce its quarterly estimate for the nation’s economic growth for the April-June quarter, amid growing concern both at home and abroad over deteriorating economic and business conditions.
Economists agree that the economy may further contract — some say by up to 4.0 percent on an annualized basis.
During the January-March quarter of fiscal 1998, the economy shrank by an annualized 5.3 percent compared with the previous quarter, leading to the nation’s first annual economic contraction in 23 years, the EPA said in July.
At the time, the EPA calculated that annual growth in gross domestic product for fiscal 1997 came to -0.7 percent, lower than the -0.5 percent logged in fiscal 1974, previously the worst figure in the postwar era.
As for upcoming statistics, Hiroaki Muto, an economist at the Sumitomo Life Research Institute, expressed concern over the worst-case scenario. “As far as the April-June quarter is concerned, we can hardly retain optimism,” he said. “The economy grew worse during the period; firms’ investment in equipment, consumer spending and employment showed few signs of recovery.”
Under such conditions, the institute estimates that an annualized 3.9 percent economic shrinkage will occur from the January-March quarter, he said.
Susumu Takahashi, research department chief of the Japan Research Institute, projected an annualized 0.9 percent decrease from the previous quarter in the GDP growth rate. “During the April-June quarter, a corporate slump barred the economy from returning to a recovery track,” he said. “We estimate this trend will continue for some time to come.”
According to the institute’s projection, many categories — such as government and individual spending, housing, public works and imports — will mark decreases.
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