Japan on Track for Recovery, New Data Show

The Japanese economy is on track for a tepid recovery, although it probably dipped into technical recession late last year, government data indicated today. Gross domestic product is expected to show a sharp drop in the October-December quarter, but closely watched industry data from the Ministry of International Trade and Industry were less grim, finding business activity flat for the quarter. That was roughly in line with economists’ expectations of a 0.1% quarterly dip in MITI’s all-industries index. As the economy struggles to emerge from its worst postwar downturn, the MITI data are being used to gauge GDP, the broadest reading of health in the world’s second-biggest economy. The government has begun warning that after surprising strength in the first half of 1999, GDP probably fell in the fourth quarter to mark two quarters in a row of decline--the traditional definition of a recession. But government officials argue that the economy is already picking up again and on the way to recovery later this year. Economists agree. “It’s still two steps forward and one step back for the economic recovery,” said Ron Bevacqua, chief economist at Commerz Securities.