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Friday, February 17, 2006

Japan's Growth Spurt

Well the Japanese economy is certainly ticking along at a very lively clip: an annualised rate of 5.5% in the last quarter of last year. Quite something when you compare it to the somewhat meagre showing of the US economy ver the same period (1.1%). So should we draw the conclusion that the Japanese economy is in better underlying shape than the US one? I doubt it.

First of all, there is the nice old English expression that one swallow doesn't make a summer: 2005 growth for Japan was 2.8% compared to what - 3.6% or so for the US.

Secondly, we have been here before. In the last quarter of 2003 to be precise, when Japan registered in the unrevised numbers a rate of approximately 7%.

The big question is: is this sustainable? I still doubt it, and it seems the international investment set for once agree with me:

The Nikkei 225 fell 2.1 per cent to a three-week low of 15,713.45 on Friday, despite being pushed up briefly by strong gross domestic product figures. The fall was led by real estate stocks, which plummeted as foreigners – big buyers within the sector - continued to exit the Japanese market...........