Japanese Economic Crisis Far From Over
When Japan’s political leadership reported that their economy had grown by 4.8 % in the third quarter of 2009, the business media throughout the world proclaimed that the second largest economy on the planet had emerged from recession with flying colors. After all, a growth rate of almost 5% is nothing to sneeze at. Too bad that when it came to correct its Q3 numbers, Japan revealed that its statisticians had massively over-estimated the pace of their economy’s recovery. The revised Q3 number is actually a miserable 1.3% annualized growth.
There are two lessons from this statistical embarrassment to be scrutinized. In the first place, Japan’s economic output grew over the 3 months of Q3 by a meaningless .3%, which computes to an annualized 1.3%. This imperceptible level of growth follows a massive contraction in the Japanese economy, and came about only after a significant infusion of borrowed money as part of Japan’s economic stimulus program. Secondly, the difference between an actual 1.3% and imaginary 4.8% growth rate is so huge, especially in an economy as large as Japan’s, that this anomaly is no mere mathematical rounding error. Either Tokyo’s statisticians are egregiously incompetent, or the numbers were manipulated for reasons of political expediency.
In the same light, it is wise to be sceptical regarding all official claims regarding GDP quarterly growth and unemployment rates stemming from major economies impacted by the global economic crisis.