Looks like Japan’s going to see the end of its murky days with the sun shining again on the island.
The world’s second-largest economy grew 0.9% in the second quarter from the first three months of the year, recent figures showed. Japan joins France and Germany in terms of leading nations that are showing positive growth after a torrid year. It seems quite a turnaround for Japan, whose gross domestic product (GDP) was declining at its quickest pace ever – 13.1% on an annualized basis – in the final three months of last year.
What does this mean for the global economy? Asian benefits – In the first instance, it’s very positive for all the countries in Asia. Their largest economy is showing signs of recovery, which means increased Japanese demand for their products and greater trade between the nations. Japan was helped by its biggest trading partner, China, which also showed signs of a rebound in its second quarter, as its $586bn (£355bn) stimulus package started to kick in and boost consumer demand. China’s economy grew at an annual rate of 7.9% between April and June, up from 6.1% in the first quarter. For Japan, the implications of such a boost are obvious. Japan’s exports rebounded 6.3% during the quarter, the first gain in more than a year. This is also important for Europe. Japan is the European Union’s sixth-largest export market and the fourth-biggest buyer of European imports, according to 2007 figures from the European Commission. Any boost to Japan is a boost to its major partners. But that does not mean the nascent economic recoveries in Europe and Japan are the same.
“You have to differentiate between what’s been happening in Europe and the situation in Japan,” says Peter Dixon, an economist at Commerzbank. “In Europe, there’s been a rebound in real activity,” he adds, meaning that domestic demand has actually picked up in France and Germany.
The Japanese government unveiled a 15.4 trillion yen ($162bn; £100bn) package in April, on top of two other stimulus boosts in the previous year, taking the total public stimulus to the economy to about $260bn. Many say that this massive flow of money is doing its job and boosting the Japanese economy.
With burly economies like Japan showing tell tale signs of desperately needed recovery; let’s hope that the other crippled, like the U.S.A also show some much needed optimism in the current global scenario.
Noorie Fathima, Student Representative, Colossus