16 May 2003, 12:32  Japanese economic recovery stalls

The slow recovery in the Japanese economy ground to a halt in the first quarter of the year as the weaker dollar put pressure on exports. Figures from the Cabinet Office show that GDP was flat in the quarter to March after growth of 0.5pc in the previous quarter. The static figures ends three quarters of consecutive growth.
Exports fell 0.5pc during the three months as the weaker dollar curbed demand for Japanese cars and electronics goods. Export growth is likely to come under further pressure in the second quarter as the SARS virus hampers economic activity in Asia, hitting demand in countries such as China and Taiwan. Economic and Financial Affairs Minister Heizo Takenaka said the government has little leeway to boost growth through increased spending and economists are now forecasting that the Japanese economy will contract in the three months to June. He also said the government must take more aggressive measures to tackle deflation after the GDP data showed price falls accelerating. The GDP deflator, the broadest measure of price changes, fell a record 3.5pc in the first quarter from a year earlier. //www.fxcentre.com

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