Japan’s economy recovering
Exports grew for a fourth month in March, prompted by big companies like Mitsubishi Electric Corp. Just a year ago, Japan’s exports had hit rock bottom following the collapse of Lehman Brothers Holdings Inc, in September 2008.
Last month, Japan posted a trade surplus of 948.9 billion yen (US$ 10.2 billion), whilst imports rose 20.7 per cent, a sign of recovery and greater domestic consumer demand.
The value of shipments abroad totalled 6 trillion yen (US$ 64.8 billion) last month, lower than their peak of 7.7 trillion yen in March 2008.
The International Monetary Fund expects Japan to grow by 1.9 per cent this year, far below the growth forecast for India (8.8 per cent) and China (10 per cent). Still, it suggests that the Japanese economy is on the mend. In fact, in February the unemployment rate held at its lowest level since March 2009.
Observers expect the recovery to continue, prodded by exports towards emerging markets. Exports to Asia rose 52.9 percent, with those to China climbing 47.7 per cent; shipments to the United States grew 29.5 per cent in March from a year earlier, whilst sales to Europe increased by 26.7 per cent.
The Bank of Japan is optimistic. Its governor, Masaaki Shirakawa, said that the risk of another recession has “pretty much gone.”
To boost expansion, Japanese companies are planning to set up new plants in growth markets, like India, Taiwan and China.
The recovery is being shored up by the central bank’s policy board, which expanded a credit programme for lenders to 20 trillion yen last month and next meets April 30. The bank has kept the benchmark interest rate at 0.1 percent since December 2008.
Now financial markets and the International Monetary Fund want the Bank of Japan to inject more stimuli should the rebound fail to stem deflation. Otherwise, recovery could be weak, tip Japan’s economy back into deflation in case of changes in the foreign-exchange rate or oil price conditions. This could be prevented by increasing domestic consumer demand.
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