| Finally Rising Sun |
23 February 2004
|
Japan's GDP Sets Fastest Pace in 13 Years
It has been so long since Japan lived up to its economic potential that the recent strength of the economy there is difficult to believe. The December quarter was up 1.7% from the previous quarter, and annualized, that works out to around 7%. Japan hasn't seen growth that good since June 1990. Still, it is a frail situation.
Japan grew up and grew rich exporting, and unfortunately, that is from where the growth stems today. There is an investment and export boom in Asia, not least of all in China, that the Japanese are enjoying. And despite the weak dollar, Yanks are still buying electronics and cars from the Land of the Rising Sun. With the buck dipping below Y106, there might even be a bigger boost ahead as foreign exchange earnings may rise.
The trouble with Japan remains the domestic sector. Demand in Japanese households just isn't all that great. People remain concerned, and 60% of GDP is personal spending. It is going to take time for the psychology of the Japanese consumer to absorb the current information and act on it. Moreover, unemployment remains significantly above 5% in a country that, until the last few years, believed in jobs for life. That fact is going to weigh heavily on future results.
No one wants any economy to stagnate, but there are some economies that matter more to the world that others. Japan's economy is the second biggest in the world, and one cannot help but think that the entire world would have been richer if the lost decade of the 1990s had been better in Japan. With four consecutive quarters of growth under its belt, perhaps, the long national nightmare has ended. When the consumers on the Ginza believe that, everyone can breathe easier.
Home