japanese economic numbers improve

Japanese economic growth reached a surprisingly high 5.3% on an annualized basis in the first quarter of 2005. This followed nine months of economic stagnation that resulted from a slowdown in export growth, despite strong growth remaining in place in the US and China, Japan’s two main export markets. Previously, Japan had recorded strong economic growth in late 2003 and early 2004 as a result of strong export demand.

A significant rise in consumer spending and an increase in inventory building were the main two catalysts of this strong growth over the first three months of the year. However, this inventory building indicates that this latest surge in economic growth might not be sustained unless domestic demand remains strong. Should economic growth in the US and China slow significantly in the coming months, Japan could once again find itself in the midst of another recession.

Economics