Sun Rising for Japanese Economy?

05 March 2002

A number of recent financial reports have prompted speculation that Japan's hitherto floundering economy may be set for recovery, albeit a sluggish one.

Last week the government announced that its index of business inventories had dropped in January to its lowest point since October 1990. Such figures suggest that any slight upturn in demand – and with the US, a major importer of Japanese goods, seemingly on the road to recovery this seems likely – will necessitate a rise in production.

What is more, the country's main bourse, the Nikkei 225 Stock Average, has risen 22% in a month, jumping 5.9% on Monday, though analysts cautioned that government intervention was partly responsible.

Finally, the central bank revealed Monday that the nation’s monetary base increased 27.5% in the twelve months to February, suggesting that Japan's deflation problems may ease.

But there seems to be no let-up in major bankruptcies – the latest being construction giant Sato Kogyo on Sunday – a trend that could restrict consumer confidence and expenditure.

Data sourced from: Wall Street Journal; additional content by WARC staff