Japan economy 2010

Japan economic growth slows down.

Economic growth in Japan weakened significantly in the last financial quarter, official figures show.

Between April and June this year gross domestic product - the sum of the nation's goods and services - grew by 0.1%, much lower than expected.

Analysts say the country's export-led recovery appears to be faltering as the value of the yen appreciates.

Japan's close rivals, Germany and the US, recently reported far superior GDP figures for the same period.

Germany registered a 2.2% rise, while the US economy grew at an annualised rate of 2.4%.

World Bank figures show that in the first eight years of this century Japan's economy expanded by just 5% while China's grew by 261%.

The GDP figures give further credibility to the widely held belief that China will soon overtake Japan as the world's second biggest economy.

That will become clearer early in 2011, when GDP figures for the whole of 2010 become available for each country.

Japanese shares closed lower after the announcement, with the benchmark Nikkei 225 index falling 0.6% to 9,196.67.

Dr Seijiro Takeshita, director of Mizuho International, said Japan's government had made a mistake in its policy choice.

"The problem for Japan was they were going for short-termism as far as policy was concerned. They were trying to put a bandage over a deep wound," he told the BBC.

"Private consumption didn't take off because our economy is still so dependent on external demand or exports.

"What they should have done is made much more transformation into the domestic side, which would have induced much more spending and most importantly created more jobs in the Japanese workplace."

Japan has relied on exports for growth, but the problem is that the yen has been rising, making Japan less competitive abroad, the BBC's Roland Buerk says.

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