TOKYO -- Japan's economy grew for the first time since early last year, pulling the world's second-largest economy out of its longest recession since World War II and offering the latest sign that the world is pulling out of its economic slump.
But the data showed Japan benefited from inventory adjustments and a rise in exports and government spending -- not natural domestic demand -- suggesting lingering structural problems that could undermine any Japanese recovery.
The nation's real gross domestic product grew 0.9% in the second quarter from the prior quarter, an annual pace of expansion of 3.7%, Cabinet Office data showed. That was slightly worse than the 1% on-quarter growth and 3.9% annualized expansion forecast by Tokyo-based economists polled by Dow Jones Newswires. It was Japan's first quarter of GDP growth since the quarter ended in March 2008.
A positive growth rate could help the ruling Liberal Democratic Party mitigate what political analysts expect to be a sharp defeat in Lower House general elections on Aug. 30 after more than 50 years of almost uninterrupted rule.
The results offered the latest sign that the world, with a significant push from Asia, is shrugging off its economic malaise. Strong exports, particularly to China and other parts of Asia, were a key driver of Japan's growth. China's massive $585 billion stimulus spending and loosened bank lending has accelerated slowing growth, giving the region a boost. Hong Kong last week said it pulled out of its recession in the most recent quarter, while Singapore and South Korea have posted strong improvements.
Europe is also pulling out of recession, with positive growth reported in the most recent quarters in Germany and France. That is in contrast to the U.S., where the recession has eased in severity but where domestic consumption remains weak.
While surging domestic demand has been a key part of Asia's recovery, Japan's data Monday highlighted long-term hindrances to growth at home that set the nation apart from faster-growing Asian economies. Much of Japan's economic performance in the second quarter came from exports and government spending rather than improving conditions at home.
At the same time, firms' capital expenditures declined, and economists were skeptical of the prospects for a rise in domestic consumption absent stimulus efforts. "Unless overseas demand keeps growing, a recovery in domestic demand and [corporate investment] should take more time," NLI Research Institute senior economist Taro Saito said.
But the data showed Japan benefited from inventory adjustments and a rise in exports and government spending -- not natural domestic demand -- suggesting lingering structural problems that could undermine any Japanese recovery.
The nation's real gross domestic product grew 0.9% in the second quarter from the prior quarter, an annual pace of expansion of 3.7%, Cabinet Office data showed. That was slightly worse than the 1% on-quarter growth and 3.9% annualized expansion forecast by Tokyo-based economists polled by Dow Jones Newswires. It was Japan's first quarter of GDP growth since the quarter ended in March 2008.
A positive growth rate could help the ruling Liberal Democratic Party mitigate what political analysts expect to be a sharp defeat in Lower House general elections on Aug. 30 after more than 50 years of almost uninterrupted rule.
The results offered the latest sign that the world, with a significant push from Asia, is shrugging off its economic malaise. Strong exports, particularly to China and other parts of Asia, were a key driver of Japan's growth. China's massive $585 billion stimulus spending and loosened bank lending has accelerated slowing growth, giving the region a boost. Hong Kong last week said it pulled out of its recession in the most recent quarter, while Singapore and South Korea have posted strong improvements.
Europe is also pulling out of recession, with positive growth reported in the most recent quarters in Germany and France. That is in contrast to the U.S., where the recession has eased in severity but where domestic consumption remains weak.
While surging domestic demand has been a key part of Asia's recovery, Japan's data Monday highlighted long-term hindrances to growth at home that set the nation apart from faster-growing Asian economies. Much of Japan's economic performance in the second quarter came from exports and government spending rather than improving conditions at home.
At the same time, firms' capital expenditures declined, and economists were skeptical of the prospects for a rise in domestic consumption absent stimulus efforts. "Unless overseas demand keeps growing, a recovery in domestic demand and [corporate investment] should take more time," NLI Research Institute senior economist Taro Saito said.
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