The last quarter of 2009 saw a welcome expansion of nearly 5 percent for Japan’s economy, according to preliminary data released on Tuesday.
Concerns over a “double-dip” recession seem to have been alleviated temporarily as an upswing in the country’s exports contributed to a mini-recovery.
Things have not been easy in the nation’s financial circles as the government have significantly reduced the stimulus packages introduced by the previous administration in order to fund their own policies.
Finance Minister Naoto Kan said recently that the “economy has been slightly jolted in the short term by our reduction in stimulus but there are encouraging signs on the horizon.”
He continued, “We must still be vigilant however. Although the risk of a double-dip recession has abated, there are other concerns such as decreased global buying and the negative employment figures.”
Tokyo has come under increasing scrutiny over how it measures its GDP, especially from Chinese companies affected by the gauges. One such company, Clarus China Everbright, recently cited erratic variations in the finance ministry’s estimates last year when a solid 5 percent measurement was abruptly revised down to zero. Tokyo claims that current figures are more reliable and accurate.
Ever since the economic bubble popped in the early 90’s, Japanese expansion has been snail paced at best. A comeback seemed possible in the next decade as strong exports, particularly to the two other biggest world economies, China and the US, spurred manufacturing and growth.
However, the 2008 financial meltdown hit Japan squarely in the jaw, with exports declining rapidly. Although the country fared better than many developed nations, it slumped into one of its worst recessions in history. The following year, Japan fought back into mild growth assisted by capital inflow and a rebound in exports.
That export recovery is mostly due to the rise of China as well as many emerging economies in the region. Recently, the weaker yen has also helped. Data from the last quarter revealed that capital inflow has climbed 2 percent.
The current figures beat expert projections by about 1 percent, calming investor nerves and raising the governments hopes that the country can get back on a “V-Shaped” recovery. The finance ministry are now upgrading their annualized forecast to 4.5 percent in response to the data.
“We are hoping to enter into a period of considerable inflation in the coming year,” the finance minister concluded.
