Monday, February 13, 2006

The Sun Seems to be Rising in Japan

The Japanese recovery from the stagnation of the 1990s have been quite uneven in the recent two years, with some quarters showing red-hot growth while others have seen stagnant growth. These fluctuations will likely continue, but the overall trend does seem positive. And right now, growth appears to be very strong. Last Friday, numbers showed that private machinery orders surged 6.8% in December compared to the month before, building on two previous months gains.

Despite this surge in investments, Japan's current account surplus rose 8.6% from the year before to 1.75 trillion yen in December, as a 11% decline in the trade surplus was more than offset by a 38.1% increase in net investment income from abroad.

Economists now on average expect GDP growth in Japan to be a full 4.9% at an annual rate in the fourth quarter (Far higher than in both America and the Euro-zone), with Morgan Stanley being the most optimistic with a forecast of 7% growth. Preliminary numbers on Japanese growth is due on Friday, February 17th. We will then see whose forecast came closest (I haven't studied the data close enough to dare make a forecast of my own).


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