Japanese economy maintains growth

Press, 11 June 1980, Page 19

Japanese economy maintains growth

NZPA-Reuter Tokyo The powerful Japanese economy maintained its strong growth in fiscal 1979 despite hefty oil price rises and accelerating domestic inflation, according to a report from the Economic Planning Agency (E.P.A.). Japan’s total gross national product, the market value of the country’s goods and services, rose by 6.1 per cent to the financial year which ended last March, a 5.7 per cent annual gain in fiscal 1978, E.P.A. said. Japan, which has the second largest non-communist economy after the United States, had a G.N.P. SNZS6B,OOOM in fiscal 1979 in real terms after allowing for inflation, now running at a rate of about 8 per cent. In nominal terms, fiscal 1979 G.N.P. amounted to $1.079,D00M at 1970 prices. The 6.1 per cent rise for

the year — the highest among major industrial democracies — was marginally higher than an official government forecast of a 6 per cent gain, which was revised downwards from about 6.3 per cent last December after a spate of oil price rises.

The target was achieved, despite many pessimistic forecasts during the year, with the help of a strong 1.8 per cent real G.N.P. rise in the January to March Quarter, compared with a 1.1 per cent gain in the previous three months.

The E.P.A. said personal consumption, which ammounted for 52 per cent of the January to March G.N.P. rose by 0.7 per cent over the previous quarter, while private sector investment was up by 1.4 per cent. The government hopes to achieve a 4.8 per cent G.N.P. rise in the current fiscal

year, but many economists believe this will be impossible, mainly because of oilfuelled inflation. Inflation is expected to hit 10 per cent soon and it could rise even further because wholesale prices, which .take about six months to work through to the consumer, are now rising at a rate of more than 12 per cent.

The main problem has been higher oil prices. Japan, which imports nearly all of its oil needs — of which about 80 per cent is consumed by its export industry — is expected to face an oil bill this year of about $61,000M, nearly double the 1979 figure.