Japanese growth expected to stall

In the last quarter, forecasts for how much the Japanese economy had grown have been revised downwards from an original estimate of 1.4% to a much more disappointing 0.7%. Since the first quarter, Japan’s economy had grown by 0.2%, down from the 0.3% that was estimated beforehand. This news shows that the world’s third largest economy is struggling to gain momentum that will ultimately help it to recover, especially in light of recent events such as the Tohoku earthquake and the Fukushima nuclear disaster.

Aside from natural disasters, one of the reasons why growth is much slower in the Japanese economy than first expected is that the export sector isn’t performing too well. For decades, Japan’s economy relied on exporting goods such as consumer electronics to Western Europe, Australia and North America, but demand from Europe and the US for such goods has fallen. On top of that, demand from emerging markets in Asia such as India and China has also dipped, as they’ve also experienced a fall in growth.

While a strong recovery in Japan does seem like a distant dream, there are a few things that could spur growth for the foreseeable future. The possibility of reconstruction projects in the aftermath of the Tohoku earthquake and tsunami could help to engineer growth in the long term. While that work could help boost future growth, the fact is that the Japanese economy is struggling to recover at a pace which will suit businesses large and small throughout the country.

Learn all about CFD trading strategies and other related articles at City Index.

You may also like