Japan's government got some breathing room today after revised gross domestic product (GDP) data showed that the struggling economy managed to escape recession - at least for a little longer.
But virtually no one saw the numbers as any real good news for the economy, with a string of more recent economic figures showing that another downturn is almost inevitable.
GDP for the January-March quarter was revised upward to show growth of a real 0.1% from the previous quarter, compared with a 0.2% drop in the initial estimate released in June.
'To all practical purposes, Japan is in recession,' said Ron Leven, strategist at Lehman Brothers in Tokyo. 'The next quarter is looking like GDP will shrink quite a lot, so it's hard to see this as a meaningful change in the outlook on Japan.'
The unusually large revision was the first that pulled GDP into positive territory from negative since 1994. But economists said the change was a near certainty after the government revised up figures on spending by single-person households last week.
Single households contribute about 13% to overall consumer spending - an area that represents the lion's share or about 60% of Japan's GDP. The government rejigged the formula for single households to reduce volatility in the data.
Economists saw the overall change as minor, saying it does little to alter a picture of an economy hamstrung by rising bankruptcies, dwindling industrial output, sour bank loans, flagging exports and steady declines in consumer prices.
'It's not just history, it's ancient history,' said Richard Jerram, chief economist at ING Baring Securities. 'Too much has changed since the first quarter for this to be at all reassuring.'
But the new growth figures could give Prime Minister Junichiro Koizumi some space to manoeuvre as he tries to push through reforms in the budget for the fiscal year starting next April despite criticism that a belt-tightening could exacerbate Japan's economic problems.
