Japan's capital investment falls | The Daily Star
12:00 AM, September 04, 2007 / LAST MODIFIED: 12:00 AM, September 04, 2007

Japan's capital investment falls

Capital investment by Japanese companies fell in the three months to June for the first time in 17 quarters, raising fears for the economy as a whole as the service industry faltered, data showed Monday.
The surprisingly weak figures led some analysts to speculate that Japan's Gross Domestic Product as a whole may contract and further reduced expectations that the Bank of Japan would soon raise super-low interest rates.
But some experts cautioned that one-off factors were behind the sharp slip. The Tokyo Stock Exchange's benchmark Nikkei-225 index closed down a modest 0.27 percent amid unease over the data, dealers said.
The finance ministry said that companies, excluding the financial sector, reduced capital spending by 4.9 percent in the three months to June compared with the year earlier.
The results of the survey are used to calculate revisions in the GDP for the second quarter. Japan releases its revised growth figures next Monday.
In the preliminary estimate relased last month, the government said the world's second largest economy grew by a mere 0.1 percent in the quarter to June, or 0.5 percent on an annual basis.
If the revision turns out a negative figure, it would be the first contraction in 20 quarters for Japan, which is experiencing its longest expansion since World War II as it recovers from recession in the 1990s.
"Given the unexpectedly weak quarterly result, the possibility now seems high that the real GDP figure will be revised down to reflect a contraction," said Junichi Makino, Daiwa Institute of Research senior economist.
But he added that more data needed to be seen, with some analysts saying a change in sample size likely altered the result of the survey.
The finance ministry surveyed 24,706 companies with capital funding of more than 10 million yen (86,300 dollars) and received replies from 77.5 percent of them.
"The decline in the non-manufacturing sector is just due to exceptionally strong growth in the same period of last year," a finance ministry official said on customary condition of anonymity.

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