First Quarter Growth Disparities

June 11, 2008

Upwardly revised Japanese national income accounts released today put the first-quarter rise in real GDP at 4.0% at a seasonally adjusted annual rate (saar) after 2.9% saar in 4Q08. Half of the expansion last quarter stemmed from net exports, and personal consumption accounted for most of the rest. Each of these components of aggregate demand performed better than in 4Q07, and each will do considerably worse in the still-unfolding second quarter. Although accounting for most of the upward revision in overall economic growth, business non-residential investment slowed sharply to 0.7% saar after 4.8% in 4Q. In comparisons of 1Q08 to 1Q07, real GDP grew 1.3%, with increases of 1.5% in personal consumption and 11.1% in exports but declines of 16.6% in residential investment, 0.6% in nonresidential investment, and 0.2% in government spending. Due to a 1.5% on-year drop in the GDP price deflator, nominal GDP edged 0.2% lower from a year ago. Japan does not do as good a job of seasonally adjusting economic data as do some other governments. Part of the strength in 1Q08 no doubt reflects the extra leap day in February.

Nonetheless, Japanese growth at 4.0% saar clearly outperformed U.S. growth last quarter of 0.9% saar. And Japan was hardly alone in doing this. Real GDP climbed 6.1% saar in Germany and 3.2% saar in the entire euro area. Australia and Britain experienced growth of 2.5% and 1.6%. Growth in Asia and Latin America stayed comparatively brisk, with quarterly gains of 8.0% in Argentina and 6.6% in Brazil and y/y advances of 10.6% in China and 8.8% in India.

Only very few economies grew more weakly than the United States, notably Canada (-0.3% saar) and Portugal (-0.2% not annualized).



Comments are closed.