Does Japan offer hope around the world?

Japan has become the latest major economy to take a tentative step out of recession.

The world's second-largest economy grew 0.9% in the second quarter from the first three months of the year, figures showed on Monday.

Japan joins France and Germany in terms of leading nations that are showing positive growth after a torrid year.

It seems quite a turnaround for Japan, whose gross domestic product (GDP) was declining at its quickest pace ever - 13.1% on an annualised basis - in the final three months of last year.

What does this mean for the global economy?

Asian benefits

In the first instance, it's very positive for all the countries in Asia.

Their largest economy is showing signs of recovery, which means increased Japanese demand for their products and greater trade between the nations.

What's good for the rest of the world can only be good for the UK
Peter Dixon, economist

Japan was helped by its biggest trading partner, China, which also showed signs of a rebound in its second quarter, as its $586bn (£355bn) stimulus package started to kick in and boost consumer demand.

China's economy grew at an annual rate of 7.9% between April and June, up from 6.1% in the first quarter.

For Japan, the implications of such a boost are obvious.

Japan's exports rebounded 6.3% during the quarter, the first gain in more than a year.

This is also important for Europe. Japan is the European Union's sixth-largest export market and the fourth-biggest buyer of European imports, according to 2007 figures from the European Commission.

Any boost to Japan is a boost to its major partners.

But that does not mean the nascent economic recoveries in Europe and Japan are the same.


"You have to differentiate between what's been happening in Europe and the situation in Japan," says Peter Dixon, an economist at Commerzbank.

"In Europe, there's been a rebound in real activity," he adds, meaning that domestic demand has actually picked up in France and Germany


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