Expectations moderate in Japan and China, Euro-area economy "on track"

Business confidence moderated in Japan in the current quarter. From AFP/CNA:

The business sentiment index for large companies fell to 6.1 in the three months to March from a record high 10.5 in the previous quarter, according to a joint survey by the finance ministry and the cabinet office.

The index is expected to recover to 8.3 in the June quarter and to 11.3 in the three months to September, according to the survey of 14,301 firms, of which 11,300 replied.

This is occurring as the Japanese government tightens its belt.

The budget reduces spending for the fiscal year to March 2007 by three percent to 79.69 trillion yen (US$686 billion), the first drop for four years and the first time below 80 trillion in eight years...

Despite the cut in bond issues and spending, national debt held by the central and local governments is expected to grow to 775 trillion yen by March 2007 from 770 trillion yen at the end of March 2006, and 410 trillion in 1995.

China's economic growth is expected to slow this year. Also AFP/CNA:

China's growth rate is forecast to slow throughout the year, with gross domestic product (GDP) to rise 9.2 percent in the first quarter and 9.0 percent in the second quarter, a central bank report said Monday.

Growth will slow further to 8.9 percent in the three months to September before falling to 8.7 percent in the final three months of the year...

The report, published by the central bank research bureau in the official China Securities Journal, also predicted that inflation would increase to about 2.0 percent this year, in line with most analysts' forecasts.

French business confidence also declined in March, although from a 17-month high in February. Meanwhile, the European Commission is confident that euro-area recovery remains on track.

Euro-area economic growth is expected to have rebound during the first quarter and remains on track to reach 1.9% in 2006 after a slowdown in the last three months of 2005. Most encouraging is the outlook for private investment which has been on a clear recovery since the spring last year and should continue to expand in the months to come. Private consumption is also expected to pick up in the course of 2006 following a strengthening of consumer confidence since the summer of 2005 and a progressive improvement in employment. The outlook for exports is also positive, reflecting improved cost competitiveness of the euro area and a continued rapid expansion of world trade. These are the conclusions of the first Quarterly Report on the Euro Area for 2006.

The Quarterly Report did highlight concerns over rising house prices and household indebtedness. Speaking of which, the housing market in the UK is looking up again, with mortgage approvals rising in February before seasonal adjustments and house prices rising in February on a year-on-year basis for the first time since January 2005 according to property consultant Hometrack.