BACK ON TRACK:
Fourth Quarter GDP Surges to
3.6% Annual Rate While Imports Keep Rising
APRIL 25, 1996
The increase is equivalent to an annual rate of 3.6%, the biggest quarterly jump in four years and nine months.
Factors behind the robust figure are stepped-up public works spending resulting from government moves to shore up the economy and brisk housing starts.
As for private-sector demand, consumer spending maintained its growth momentum thanks to sales of personal computers and other popular items, and plant and equipment investment grew for the fourth straight quarter.
The expansion of imports is continuing, moreover, resulting in lower net exports and continuing negative contribution from external demand factors to economic growth.
0.9% Growth for 1995
The EPA also announced that economic growth in 1995 in real terms was 0.9%, reflecting the record new heights registered by the yen in foreign exchange markets in the spring and early summer and the consequent deceleration of economic activity. It was the third straight calendar year in which economic growth hovered between 0% and 1%.
The EPA corrected its preliminary figures for real economic growth in the July-September quarter from 0.2% to 0.6%.
The high growth in the final quarter of 1995 was backed by a combination of fiscal and monetary measures that produced a 7.2% quarterly jump in housing starts and a 6.9% boost in public works spending. The latter was buoyed by the economic stimulus measures adopted in September 1995 and the former by the lowest-ever official discount rate, which spurred construction of single-unit homes.
Higher Imports
The expansive growth in the fourth quarter was in spite of a negative contribution from external demand factors, which diminished the quarterly growth rate by 0.6 points. This was due to a 6.4% rise in imports of capital and services, as manufacturers accelerated their shift to overseas production and increasingly "reimported" foreign-made appliances and other products into Japan.
| FY 1995 | I | II | III | IV | |
|---|---|---|---|---|---|
| Real GDP | 0.9 | 0.1 | 0.6 | 0.6 | 0.9 |
| Personal consumption | 1.6 | 0.1 | 0.7 | 1.2 | 0.4 |
| Private housing investment | -6.1 | 1.0 | -6.7 | -5.7 | 7.2 |
| Private plant and equipment investment |
2.9 | 0.5 | 2.8 | 0.6 | 1.4 |
| Increase in private inventories | -- | 55.5 | -25.3 | 75.0 | 34.7 |
| Government consumption | 2.0 | 4.2 | -1.2 | 0.2 | -0.4 |
| Government investment | 1.4 | -3.4 | 3.2 | 5.8 | 6.9 |
| Increase in public inventories | -62.3 | -21.9 | -59.1 | -37.3 | -48.8 |
| Net exports of goods and services | -37.6 | -11.4 | 3.9 | -32.1 | -51.9 |
| Exports of goods and services | 5.0 | -0.0 | 4.2 | -1.6 | 1.1 |
| Imports of goods and services | 13.5 | 1.9 | 4.3 | 3.0 | 6.4 |