Japan's economy shrinks 0.3 per cent in October-December 2010

Japan's economy shrank 0.3 per cent year-on-year in the October-December 2010 quarter, for the first time in five quarters, even as neibhouring China's growth engine chugged at an average pace of 9.31 per cent.

Analysts said the 0.3 per cent dip in Japan's gross domestic product (GDP), however, was lower than the expected 0.5 per cent decline.

Japan's economy grew 0.8 per cent in the July-September 2010 quarter and the current quarter fall is seen by many as a temporary blip due to fall in domestic spending and a slump in exports.

The government and the Bank of Japan are of the view that the economy is still growing, said Japan's economic and fiscal policy minister Kaoru Yosano.

He also said the current dip does not call for change in the government's policy stance.

The Japanese government expects the economy to bounce back to growth with an expected recovery in exports to China and other parts of Asia offset weak domestic demand.