UPDATE 1-Japan Q2 growth slows amid worry about yen rise

* Q2 GDP grows 0.1 pct qtr/qtr, annualised 0.4 pct

* Export growth moderates, consumer spending stalls

* Tame outlook, yen rise add to policy challenges
(Adds analyst quotes, graphic, details)

By Tetsushi Kajimoto and Stanley White

TOKYO, Aug 16 (BestGrowthStock) – Japan’s economic growth slowed
markedly in April-June and analysts predict further slowdown,
adding to policymakers’ difficulties as they grapple with
deflation and a rise in the yen that threatens an export-reliant
recovery.

Slowing growth in Japan’s key export destinations such as the
United States and China clouds the outlook, while policymakers
step up efforts to talk down the yen (JPY=: ) after it surged to a
15-year high against the dollar this month of 84.72 per dollar.

Prime Minister Naoto Kan and Bank of Japan Governor Masaaki
Shirakawa are likely to meet later this week to discuss the yen’s
strength and possible responses, although analysts say likely
options would be limited.

“I think the Bank of Japan and the government need to take
decisive action against currency moves. Solo currency
intervention is possible if the yen approaches 80 to the dollar.
If that is accompanied by monetary easing by the Bank of Japan,
it may have a certain effect,” said Takeshi Minami, chief
economist at Norinchukin Research Institute in Tokyo.

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Graphic on the yen-dollar rate since 1995:

http://graphics.thomsonreuters.com/RNGS/2010/AUG/YEN.jpg

More stories on the Japanese economy [ID:nECONJP]

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The quarterly expansion of 0.1 percent in gross domestic
product (GDP) translates into an annualised growth of 0.4
percent, well below the median market forecast of 2.3 percent
annualised growth and much less than the 2.4 percent annualised
growth in the United States in the same quarter.

That followed a revised 4.4 percent annualised growth in the
first quarter, as export growth moderated and a stimulus-driven
recovery in consumption ran out of steam.

It was the third straight quarter of expansion.

“Consumption was flat, showing government payouts to
households with children didn’t give much of a boost to private
spending,” Minami said, adding that the yen’s rise may begin to
hurt export growth in the latter half of the current fiscal year.

Japan’s economy has been spotty since emerging from its worst
recession since World War Two in the second quarter of 2009 on
the back of exports, particularly to Asia, and government
stimulus for spending on energy-efficient cars and electronics.
(Additional reporting by Kaori Kaneko and Yoko Nishikawa;
editing by Charlotte Cooper)

UPDATE 1-Japan Q2 growth slows amid worry about yen rise