/www.bloomberg.com/ By Daisuke Takato
Tokyo, Feb. 14 (Bloomberg) -- Japan's economy unexpectedly grew last quarter, easing the threat of a fourth recession in a decade, after a sales surge by Honda Motor Co. and other exporters.
Gross domestic product grew 0.5 percent from the third quarter, seasonally adjusted, the Cabinet Office said. A contraction of 0.4 percent was the median forecast of 41 economists in a Bloomberg survey. The economy grew 0.3 percent in 2002 and last contracted in the final two quarters of 2001.
Exports accounted for more than half of growth in world's second-largest economy in the quarter, rising 4.5 percent as bottlenecks caused by an October port strike in the U.S. were cleared. Honda and Toyota Motor Corp. forecast exports will fall in 2003, putting the onus on Prime Minister Junichiro Koizumi to sustain growth by reviving demand among Japanese consumers.
``The GDP results came as a positive surprise,'' said Fumiyasu Sato, who helps manage 150 billion yen ($1.2 billion) in Japanese equities at CDC IXIS Asset Management Japan Co. ``Still, concerns remain about the future of the economy.''
Of the 41 economists in the Bloomberg News survey, 38 said they expected the economy to contract in the fourth quarter after a revised 0.7 percent gain in the third quarter.
Koizumi is preparing to name a successor to central bank governor Masaru Hayami, whose term ends March 19, and has said he will choose someone who will ``aggressively'' fight falling prices that have cut company profits for more than four years.
Stocks Gain
``It's almost impossible to do business'' when prices are falling, said Yoshimi Hasegawa, a director at Fuji Machinery Co., which builds transmissions for Subaru brand cars. ``If there's one wish we could make, it would be for inflation to return to about 2 percent a year.''
Japanese stocks rose, led exporters such as Sony Corp. The Nikkei 225 Stock Average was up 1.2 percent to 8703.97 as of 1:20 p.m. in Tokyo.
The yen was at 120.54 to the dollar, compared with 120.56 late yesterday in New York.
Japanese exports are already slumping as world economic growth falters. In December, exports fell 7.3 percent from November, Finance Ministry figures showed last month. Toyota, Japan's biggest carmarker, predicted its exports would fall 5.9 percent this year. Honda said it expected a 12 percent drop.
``This is the last time that Japan will be able to rely on exports to drive growth,'' said Kazutaka Kirishima, senior economist at Sumitomo-Life Research.
Slowing Growth
Growth in the U.S., the world's No. 1 economy and Japan's largest overseas market, slowed to an annual pace of 0.7 percent last quarter from 4 percent in the third. Germany's economy, Europe's biggest, grew 0.3 percent in the third quarter from the second.
Tokyo Electron Ltd., the world's second-largest supplier of chip-making equipment, left its sales and profit forecast unchanged, even as it reported better-than-expected earnings, because Intel Corp. and other customers said they would buy fewer machines.
From a year earlier, the economy grew 2.4 percent in the fourth quarter. Nominal GDP, which is not adjusted for falling prices, fell 0.1 percent in the fourth quarter from the third quarter.
Consumer spending, which accounts for about 55 percent of the economy, rose 0.1 percent in the fourth quarter, less than the revised 0.8 percent gain in the third.
``Consumers won't shop when they know prices will fall, and businesses will also cut spending because their investments will fall in value,'' said Masaki Kuwahara, an economists at Nomura Research Institute.