JAPAN’S RETURN TO GROWTH

JAPAN EMERGES FROM POST-QUAKE SLUMP

Andy Sharp

Bloomberg, November 14, 2011

Japan’s economy expanded for the first time in four quarters as exports recovered from a record earthquake, an expansion that is already slowing because of weakening overseas demand.

Gross domestic product grew at an annualized 6 percent in the three months ending Sept. 30, the fastest pace in 1 1/2- years, the Cabinet Office said today in Tokyo. At 543 trillion yen ($7 trillion), economic output was back to levels seen before the March 11 earthquake, the report showed.

Japan’s return to growth after three quarters of contraction was driven by companies including Toyota Motor Corp. making up for lost output from the disaster. A sustained rebound will depend on how much reconstruction demand can offset a slowdown in global growth as Europe’s debt crisis damps global confidence and an appreciating yen erodes profits.

“GDP will slow very sharply in the current quarter,” said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. A yen trading near World War-II highs and Europe’s fiscal woes are “very strong headwinds” for the nation’s manufacturers, he said.

Expansions in Asian nations from China to South Korea to the Philippines are already showing signs of cooling. International Monetary Fund Managing Director Christine Lagarde said on Nov. 12 that Japan needed to swiftly implement reconstruction spending.

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