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Japan's Economic Growth Revised Upward

  • Catherine Makino

Japan's economy expanded more than originally thought and the Bank of Japan has held off on raising interest rates. Catherine Makino has these stories and more in our weekly look at business news in Japan.

Japan's government reported its economy grew by 3.1 percent for the first quarter of this year, compared with its initial report of 1.9 percent on May 19.

Edwin Merner, the president of Atlantis Investment Research Corporation in Japan, says the growth in the first quarter could mean that Japan's gross domestic product will expand by three percent or more for the entire year.

"The first quarter of growth came from all major components of the GDP (gross domestic product), including consumer spending, which accounts for over 50 percent of the GDP, capital investments which account for about 13 to 14 percent of the GDP, and exports, which account for something around 12 or 13 percent of it. So you have major parts of the GDP expanding, which is very healthy," said Merner.

Although the economy seems to be well out of its long years of stagnation, the Bank of Japan decided to hold its key interest rate at zero. The bank has said in the past that it expects to raise rates sometime in the future, ending a policy it began several years ago to try to end years of falling consumer prices and to ease the burden on Japanese banks, which were trying to deal with vast amounts of unpaid loans.

In other news, Schindler Elevator Company executives came to Japan from Switzerland to apologize for malfunctioning elevators that have killed people in Japan. Recently a 16-year-old boy in Tokyo was killed by a faulty Schindler elevator. The elevator rose when the boy was leaving and pinned him against the top of the door frame.

Japan's Ministry of Land, Infrastructure and Transport will examine more than 7,000 Schindler elevators in the country.

Toyota Motor said it plans to promote environment-friendly cars. The company will more than double the number of its hybrid electric-gasoline models to 17, and predicts it will sell about one million hybrids a year beginning in 2010. The company will also introduce ethanol-powered cars in Brazil in 2007.

Japanese consumers are drinking more German wine with the start of the World Cup. The soccer championships are being played this month in Germany. Orders for German wines increased from January to May to more than 4,400 cases, which is more than double the 1,700 cases ordered last year.

The country's football team's logo was put on the bottles of the German wines.

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