Monday, 28 December 2009

Japanese economy grows despite deflation

Japan reported today that industrial production rose in November, making it very likely that the economy will maintain its expansion in the fourth quarter.

The Ministry of Economy, Trade and Industry reported today that industrial production increased 2.6 percent in November after having increased 0.5 percent the previous month.

The ministry's survey of production forecast showed that production is expected to increase 3.4 percent in December and 1.3 percent in January.

These data indicate that the Japanese economy is likely to grow again in the current quarter for the third consecutive quarter.

Growth in Japan is being maintained despite the fact that the country continues to suffer from deflation. A report last Friday showed that consumer prices fell 0.2 percent in November and were down 1.9 percent from a year ago. Another report today showed that monthly wages declined 2.8 percent from a year ago.

Japan is the only major economy in the world to suffer from deflation though. Despite earlier fears of the financial crisis driving economies into deflation, most other major economies have seen consumer prices resume their uptrends in recent months, thanks to determined stimulative monetary and fiscal policies that have helped these economies to reflate.

Growth in its export markets has in turn helped the Japanese economy. Another report last week showed that exports rose 4.9 percent in November, the biggest increase since November 2002.

That is not to say that Japanese consumers have not done their part. A report last Friday showed that household spending rose 2.2 percent in November from a year ago.

The Japanese government expects the economy to continue growing next year with a little help from the government. On Friday, the Japanese government said that the economy is projected to expand by 1.4 percent in the year starting April 2010 as it approved a record 92.3 trillion yen budget for the next financial year.

So for the moment, Japan's economic expansion looks set to continue.

1 comment:

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