18 August 2009

Japan's economy sees growth

Data emerged this week that shows the world's second-largest economy has ended its longest recession since World War II.  Japan's economy grew for the first time since early last year.

It is the latest sign that the world is pulling out of its economic slump as European titans Germany and France also released positive second quarter numbers.

The data showed Japan benefited from inventory adjustments and a rise in exports and government spending, which technically is not natural domestic demand, suggesting lingering structural problems that could undermine any Japanese recovery.

The nation’s real gross domestic product grew 0.9% in the second quarter from the prior quarter, an annual pace of expansion of 3.7%, Cabinet Office data showed.

Strong exports, particularly to China and other parts of Asia, were a key driver of Japan’s growth. China’s massive $585 billion stimulus spending and loosened bank lending has accelerated slowing growth, giving the region a boost.

Hong Kong last week said it pulled out of its recession in the most recent quarter, while Singapore and South Korea have posted strong improvements.

Europe is also pulling out of recession, with positive growth reported in the most recent quarters in Germany and France. That is in contrast to the U.S., where the recession has eased in severity but where domestic consumption remains weak.

For related information, go to www.isa.org/productivity.