GDP HALTS SKID:
Economy Edges Up in Third Quarter

DECEMBER 9, 1996

Japan's gross domestic product in the July-September quarter of 1996 inched up 0.1% from the preceding quarter, or an annual rate of 0.4%, according to preliminary statistics released by the Economic Planning Agency.

The figure shows that the economy rebounded somewhat in the third quarter after contracting at an annual rate of 1.1% in the previous three months.

An EPA spokesman claimed that the return to growth confirms that the economy is recovering moderately and that the government projection of 2.5% growth for fiscal 1996 (April 1996 to March 1997) is within range.

The main reason for lackluster growth is a 0.1% contraction from the preceding quarter in personal consumption, which makes up about three-fifths of GDP. Sales were particularly sluggish for summer clothing and foodstuffs.

Partly as a reaction to the high growth registered over the previous few quarters, private housing investment fell by 0.5% from the preceding quarter.

The economy was buoyed somewhat by private plant and equipment investment, which showed a quarterly increase of 1.6%--the seventh straight quarter of growth.

The domestic demand component of GDP growth was minus 0.2 points, while the external demand component was 0.3 points.

Economic Growth Rates (%)

		1995	1996
	FY 1995	IV	I	II	III
Real GDP	2.4	1.3	2.0	-0.3	0.1
Personal consumption	2.8	1.0	2.0	-1.0	-0.1
Private housing investment	-6.8	7.6	6.0	5.9	-0.5
Private plant and equipment investment	5.7	2.5	0.8	1.4	1.6
Increase in private inventories	1814.3	19.2	1.9	-48.1	-117.1
Government consumption	3.0	0.1	0.8	0.1	1.4
Government investment	7.7	3.9	6.5	2.1	-2.0
Increase in public inventories	-41.2	74.5	243.9	-58.3	-68.2
Net exports of goods and services	-53.3	-41.7	-55.7	-82.0	597.4
Exports of goods and services	4.5	1.0	-0.7	0.1	1.5
Imports of goods and services	15.1	4.7	2.0	1.8	-0.7