Japan escapes recession -- for now

Japan will still likely enter recession in December but is spared for now

By CNN's Alex Frew McMillan in Hong Kong

TOKYO, Japan -- Japan has escaped a recession on a technicality, for now.

The Japanese government on Thursday revised its first-quarter gross domestic product figures, as usual.

But the revision was significant because it moved Japan out of the red and into the black. It showed Japan's economy grew 0.1 percent in the first quarter, instead of contracting 0.2 percent.

Officials have already admitted the economy shrank in the second quarter. So Japan would have met the definition of a recession, two negative quarters in a row, when those numbers come out in September.

Wait to December is little consolation

COUNTRY PROFILE At a glance: Japan Provided by CountryWatch.com    CNN.com Asia More news from our Asia edition

Now it won't, but that's little consolation for a nation that has suffered more than a decade of economic woes.

"The second quarter was absolutely, shockingly terrible, and it doesn't look like the third quarter is going to be any better," said ING Barings Chief Economist Richard Jerram told CNN.

So Japan will likely have a recession when the third quarter GDP numbers come out in December.

The first quarter figures were revised upward because single-household spending was better than first figured.

Economists had been surprised to see Japan's economy shrink in the first quarter, when consumption still seemed pretty strong. The economy has since turned drastically for the worse.

Little sign of relief

Jerram noted that, with the dollar weakening against the yen this week, there's little sign of relief. A weaker yen had been helping exports.

The yen had strengthened Thursday morning to 119.93 against the dollar. Tuesday's shock move by the central Bank of Japan was partly designed to weaken the yen.

But the declining U.S. currency is taking that crutch away.

Japan's GDP numbers are more volatile and subject to revision than similar stats in countries like the United States.

Japan in fact uses a different definition of recession, looking at a "diffusion index" of various economic figures.