TOKYO — Japan’s economy contracted less than expected in the second quarter of the year, signaling that recovery from the devastating March earthquake and tsunami may be swifter than originally predicted.
Japan’s Cabinet Office said Monday that the country’s April to June gross domestic product dropped 1.3 percent on an annualized basis. GDP declined 0.3 percent from the previous quarter on a seasonally adjusted basis. This comes after an annualized drop of 3.7 percent in the first quarter of the year.
Economists are expecting the economy to rebound in the third and fourth quarters as Japan rebuilds the northeastern region ravaged by the natural disaster.
Takahiro Sekido, chief economist for Japan at Credit Agricole, said that as recently as last week, his firm was forecasting a 2.6 percent drop in Japan’s second-quarter GDP on an annualized basis.
“The level released today was much more positive than our expectations,” he said.
Sekido attributed the smaller-than-expected drop to, among other things, a faster rate of recovery than economists predicted.
“Also private consumption looks very strong,” he said. “It’s not negative in the second quarter, but almost flat on a quarter-on-quarter basis. That is amazing for me — it’s the most surprising thing [about today’s figures].”
Japan’s private consumption contracted just 0.1 percent from April to June compared to the previous quarter, and fell 0.3 percent on an annualized basis.
Sekido said that he expects GDP to reach positive growth of 1.1 percent on the quarter for July through September, and to grow a further 1.8 percent in the fourth quarter. He also noted that the country should see a year-on-year drop of about 0.7 percent in the total GDP for 2011.
“Overall this year’s growth should be the same [as previously predicted], but it is a much faster pace of growth than we expected,” he said.
Credit Agricole expects Japan’s GDP to grow 2.9 percent year-on-year in 2012.
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