Japan's gross domestic product increased 0.9 percent (or an annualized 3.7 percent) in real terms for the April-June period from the previous quarter, marking the first growth in five quarters. The rise, which follows a 3.5 percent (annualized 13.1 percent) fall in October-December 2008 and a 3.1 percent (annualized 11.7 percent) drop in January-March 2009, appears to show that the economy has hit bottom. But the economic recovery lacks legs. It is too early to assume that the economy is on a steady growth track.
Overseas demand boosted GDP 1.6 percent, but sluggish domestic demand pulled it down 0.7 percent. Economic growth in China and Southeast Asia contributed to a 6.3 percent increase in exports. Since the U.S. and European economies are still stagnant, it will take a long time for Japanese exports to recover to the level that prevailed before the global recession.
Although consumer spending, which accounts for 55 percent of GDP, rose 0.8 percent — the first rise in three quarters — it was mainly propped up by government stimulus measures such as subsidies for fuel-efficient cars and an "eco-point" system for purchases of energy-efficient appliances. After demand for these products drops, consumers may once again tighten their purse strings. The income situation is rather gloomy. Average wages at Japanese firms dropped by a record 7.1 percent in June compared to the year before.