Japan - financial crisis

Economy limps out of recession ahead of polls

Article published on the 2009-08-17 Latest update 2009-08-17 07:52 TU

A worker walks past the chimneys of a factory at Keihin industrial area in Kawasaki, near Tokyo, on Monday
(Photo: Reuters)

Japan's economy has rebounded for the first time in five quarters, following Germany and France out of recession. The figures are good news for the country’s embattled Prime Minister, Taro Aso, who faces elections this month.

Aso on Monday credited his policies for lifting the country out of recession after fresh data showed its first economic growth in over a year. His long-ruling party risks being swept from power amid anger over the worst economic slump in decades.

"Since I became prime minister, I have done my best on economic measures," Aso told a televised debate with five other party leaders. "As a result, we have seen some signs of a brighter future for the economy."

Japan's economy, the second largest in the world, grew by 0.9 percent in April-June, after contracting by a revised 3.1 percent in the first quarter and by 3.5 percent in the fourth quarter of 2008, the Cabinet Office said.

On an annualised basis, Japan's gross domestic product grew 3.7 percent in the second quarter. The country has exited recession before the United States, which shrank 1.0 percent in the second quarter of 2009.

Japan had plunged into recession in the second quarter of 2008 as a severe global downturn crushed demand for its cars, electronics and other goods.

Tokyo launched a series of pump-priming packages, included cash handouts, to cushion the blow of rising unemployment, which hit 5.4 percent in June. This figure was approaching Japan’s post-World War II high of 5.5 percent.

Aso, who has for months trailed his opposition Hatoyama in polls ahead of the August 30 vote, also vowed to strengthen the economic rebound to ensure the Japanese people felt its benefits.

Yukio Hatoyama, head of the opposition centre-left Democratic Party of Japan, fired back at the Prime Minister: "Mr Aso said Japan is seeing signs of economic recovery, but it is not what the people are actually feeling at all."