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ADB: Japan likely to return to growth in 4Q

November 26, 2014

MANILA, Philippines (AP) — The president of the Asian Development Bank said Wednesday that Japan’s economy is expected to return to growth in the fourth quarter of this year and its recession will have little impact on Southeast Asian economies.

Japan earlier this month said its economy, which is the world’s third biggest after the U.S. and China, slipped into recession in the third quarter. It contracted an annualized 1.6 percent in the July-September period as consumer and corporate spending failed to gain momentum after a sales tax increase in April.

“It’s not very encouraging but if we examine the structures of GDP very carefully we cannot be too pessimistic,” Takehiko Nakao told reporters.

“I don’t think there will be a very big impact from the Japanese economy” on growth in Southeast Asia, where Japan is a big investor, he said.

Individuals and companies ramped up spending before the April 1 increase in Japan’s sales tax and the economy is still undergoing an adjustment from that, Nakao said. The contraction in the third quarter reflected businesses letting inventories dwindle rather than replenishing stocks of goods, he said.

Nakao also said the ADB was ready to cooperate with the Asian Infrastructure Investment Bank led by China, touted by some as a possible rival of the Manila-based development lender. Cooperation, which could be discussed after the AIIB secretariat is established, could come in the form of joint financing, he said.

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