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Japan's Economy Grew in First Quarter - 2001-08-16

The Japanese government said Thursday it has revised the country's GDP growth figures for the first three months of the year. Instead of the 0.2 percent decline the government reported in June, it now says the economy actually grew 0.1 percent.

While the change means Japan officially managed to avoid slipping into recession during the first quarter, most analysts agree that the world's second largest economy is still under enormous pressure. They say the change does not alter a gloomy picture of an economy burdened by low consumer confidence and collapsing corporate profits. If Japan hits two straight quarters of negative economic growth as it is expected to do, it will be in a recession.

Ron Bevacqua, a Tokyo-based economist for Commerz Securities, says: "It [the revision] makes it slightly positive growth rather than flat, but it does not really change the trend. Almost certainly, the quarter that just finished, April to June, will show a pretty substantial decline in GDP [Gross Domestic Product] and we are looking at the same kind of picture for the quarter we are in now, the July to September quarter."

Mr. Bevacqua notes that such vital industries as automotive and technology are continuing to lose money.

"Japan has lived for the last 10 years primarily off of export growth and secondarily off of domestic stimulus through either fiscal or monetary policy." He said. "With the United States slowing down and no sign of a bottoming out, export growth is collapsing. It is the worst since the early 1990's and there is no sign of a turnaround."

The revised GDP figure was released shortly after the Bank of Japan downgraded its assessment of the economy for the third month in a row and eased its ultra-loose monetary policy to support the country's ailing corporate sector.