Japanese economy in April-June shrank more than earlier reported

Data released troday from the Japanese Cabinet Office shows the revised gross domestic product shrank at a price-adjusted annual pace of 2.1 per cent in April-June from the previous quarter, as against a preliminary 1.3-per cent contraction announced three weeks ago.

The figure was in line with expectations from a survey of economists by Dow Jones Newswires and the Nikkei.

Analysts though, remain upbeat about growth prospects in Japan in the coming quarters as post-quake reconstruction is expected to provide a boost to the nation's economy. According to a government survey of 40 economists released yesterday, on average, annualised GDP is projected to expand by 4.95 per cent in the July-September period, followed by a  2.63 per cent growth over the October-December quarter.

According to some analysts, next year held out brighter economic prospects and Mitsumaru Kumagai, chief economist at Daiwa Institute of Research said, the government's expected third extra budget, currently under preparation, should impact economic growth positively in the long run.

However, the strong yen and weakening overseas demand would likely remain as downside risks, they say.

According to Toshihiro Nagahama, senior economist at Dai-ichi Life Research Institute there had been an expectation for a strong recovery in the second half of the year, but given concerns of a global economic slowdown and a strong yen, apprehensions were rising that the recovery might not be as strong as previously expected.