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Tuesday, 17 May, 2005, 07:18 GMT 08:18 UK

Japanese growth confirms recovery

Japanese financial district Japan's economics minister has said his country is "heading towards recovery" after figures showing 1.3% growth in the first quarter of 2005.

Economics Minister Heizo Takenaka said it might no longer be appropriate to describe Japan's economy as being in "a soft patch".

Japan had a mild recession from April to September 2004, and zero growth from October to December.

But economists warned Japan's recovery remains fragile and may be short-lived.

The annualised growth rate was 5.3%, while the quarterly growth rate was the best since the first quarter of last year when it was 1.4%.

Stop-start growth?

Japan's first-quarter growth rested on rises in consumer spending and on Japanese companies building up their inventories.

Inventory building suggests a more optimistic view of future prospects but without sizeable demand it is unlikely to continue.

Exports fell 0.2% in the January-to-March period due to slower demand for machinery from Asia.

Economists have put this down in part to China's efforts to curb runaway growth.

Japan's economy "is going to be zigzagging for a while", said Yukari Sato, chief economist of CSFB Securities Japan.

She highlighted "uncertainty about external demand" due to "uncertainty about the American economy".

"The question is whether this is a sustainable growth rate and I think the quick answer is No'", said HSBC Securities Japan chief economist Peter Morgan.




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Related to this story:
Japan economy slides to recession (16 Feb 05 |  Business )
Business confidence dips in Japan (15 Dec 04 |  Business )
Japan narrowly escapes recession (08 Dec 04 |  Business )

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