UPDATE 1-Japan Q3 GDP revised up but govt wary of outlook

(For more stories on Japan’s economy please click [ID:nECONJP])

* Growth revised to 1.1 pct qtr/qtr vs initial 0.9 pct

* Govt aims to compile 2011/12 budget as economy slows

* Weak outlook keeps BOJ under pressure to keep easy policy
(Adds analyst quotes, details)

By Rie Ishiguro and Kaori Kaneko

TOKYO, Dec 9 (BestGrowthStock) – Japan’s economy grew a revised 1.1
percent in July-September from the previous quarter, exceeding an
initial government estimate, but that offered little comfort to
policymakers wary of slowing growth in the current quarter.

Despite the upward revision, a recent slew of weak data has
underscored the view that the economy will contract slightly in
October-December due to a global slowdown and a pull-back from
the last-minute surge in stimulus-driven consumption that spurred
third-quarter growth.

Tokyo is aiming this month to compile its budget for the year
from next April, while struggling to strike a balance between
shoring up a flagging economy and reining in its huge public
debt, about twice the size of the country’s gross domestic

With little room left for the government to boost spending to
stimulate the economy, analysts expect the Bank of Japan will
remain under pressure to keep its very easy monetary policy and
may ease policy further if the economy slows more than expected.

“Given a slump in Japan’s auto output and a slowdown in
developed economies and China, the economy will remain in a
severe situation until the first half of next year,” said Takeshi
Minami, chief economist at Norinchukin Research Institute.

“We can’t expect much from the fiscal front even with the
government aiming to compile the next fiscal year’s budget this
month, so pressures will mount for monetary policy to support the


The revised GDP translates into annualised growth of 4.5
percent, exceeding an initial reading of 3.9 percent and above
the 4.1 percent rate expected by economists, due to upward
revisions in capital spending and inventories.

The United States economy grew 0.6 percent on the quarter, or
2.5 percent annualised, while quarter-on-quarter growth in the
16-nation euro zone was 0.4 percent.

Japan’s revised GDP data showed capital spending up 1.3
percent in July-September from the previous quarter, compared
with the preliminary 0.8 percent increase and a 1.4 percent gain
expected by economists.

Personal consumption was revised slightly upward to a 1.2
percent gain, against an initial reading of 1.1 percent.

Analysts polled by Reuters expect the economy to shrink 0.1
percent this quarter as exports slow and auto output slumps after
the expiry of government incentives for purchases of low-emission
cars. [ID:nSLA9ME6I3]

The economy is expected to resume its recovery next year on
the back of emerging economies’ strength, but the outlook is far
from certain.

The BOJ last month rolled out a 5 trillion yen ($60 billion)
asset buying scheme under which it injects funds into the
struggling economy by buying assets ranging from government bonds
to corporate debt. The BOJ holds its next rate review on Dec.

Japan’s government wants to keep its self-imposed cap on new
bond sales in the 2011/2012 budget draft it aims to complete by
Dec. 24, as Europe’s debt crisis highlights the woes of heavily
indebted nations.

Any delay in drafting the budget may prompt a rise in bond
yields, as it could raise market worries about the government’s
ability to rein in debt.
($1=83.99 Yen)
(Writing by Tetsushi Kajimoto; Editing by Edmund Klamann)

UPDATE 1-Japan Q3 GDP revised up but govt wary of outlook