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Japan’s recovery from disaster slows

The Japanese economy has grown by just 0.3% in the second quarter of 2012; analysts had been predicting a figure of 2.3%.

Whilst growth of 0.3% is better than many developed Western countries it shows that the country has taken longer than expected to recover from last year’s devastating earthquake and tsunami. Heavy investment has been poured into the affected regions such as the Tohoku region and things are starting to get back onto their feet. The slowdown of other Asia economies has also impacted the Japanese after the nation has struggled with weaker exports and lessening consumer spending.

The high value of the Yen has hurt exports especially with many of the country’s major trade partners sliding into or hovering above recession. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.

Private consumption, the engine of the economy, grew 0.1 per cent, the weakest in five quarters, versus the median estimate for 0.3 per cent growth. In the previous three months consumer spending rose 1.2 per cent after being buoyed by government subsidies for fuel-efficient cars which are expected to expire in August.

The strongest aspect of the country’s GDP came from the public investment sector which saw a rise of 1.7% from the first quarter. The majority of spending was focused on rubble clearance in the tsunami hit areas and the decontamination of the damaged nuclear power stations in Fukushima, Miyagi and Iwate.

The GDP figures have impacted the currency markets by weakening demand for commodity based currencies such as the Australian and New Zealand Dollars as well as the Canadian Dollar. The US Dollar strengthened against a basket of currencies on the back of its safe haven status.
Pressure will now be building on the policy makers at the Bank of Japan to consider new monetary stimulus to help bolster domestic demand.

Last week the BoJ refused to take further quantitative easing measures despite being aware of the fall in factory and export output.
Things are looking relatively good for the Japanese economy and it is miraculous that the country has recovered from the devastation of the 2011 earthquake in such a short space of time. It’s economy is set to prosper but like all other nations that will all depend on the situation in Europe a situation that remains gloomy.

The Japanese Yen to Euro exchange rate is currently trading at 0.010405

The Japanese Yen to US Dollar exchange rate is currently trading at 0.012793

The Japanese Yen to British Pound exchange rate is currently trading at 0.008166

The Pound to Euro rate is currently trading at 1.274

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