Japan’s Growth Rate Decreases

Japan’s economy showed further signs of a slowdown in the second quarter, although its growth rate was still considered relatively healthy.

But many economists say the economy is in danger of sliding into a recession unless it is provided with sufficient stimulus through lower interest rates.

Growth in gross national product, the broadest gauge of economic health, slowed to an inflation-adjusted 0.5% in the quarter that ended June 30, compared to 2.7% the previous quarter, the government’s Economic Planning Agency said Thursday.

On an annualized basis, GNP grew at a 2% rate in the latest quarter, compared to an 11% annual rate in the first quarter.

“The April-June GNP figure was not very bad . . . but this doesn’t mean the economy can keep growing in the period ahead without lower interest rates,” said Nobuyuki Saji, senior economist at Nikko Research Center.

Economists said second-quarter GNP growth was reasonably strong, considering that it was compared against an exceptionally high base during the first quarter.

But Yasuo Katsumura, vice minister of the Economic Planning Agency, said the economy was moving into a period of stagnation.

“It’s clear that Japan is in the midst of a credit squeeze leading to a recession,” said Robert Feldman, vice president of economics research at Salomon Bros. Asia Ltd.

“The third and fourth quarters of this year and the first quarter of next will be the weakest quarters.”

Consumer spending led GNP growth in the latest quarter, economists said. It rose 1.8%, compared to 1% in the first quarter.