Japanese businesses investment fell less than previously anticipated during the last quarter according to the latest data from the Ministry of Finance. Capital spending (excluding software) fell 5.3 percent in the three months ended March 31 from a year earlier.
While business investment has now fallen in each of the last four quarters, the pace of decline is less than half that recorded during Japan's three most recent recessions. If today's numbers are anything to go by it is quite possible that the Japanese government will raise its first-quarter economic growth estimate on June 11.
So at the present time the Japanese economy is showing much more resilience than in 1998 or 2001. The reason for this resilience is not hard to find. It is certainly not the result of a resurgence in domestic consumption, but rather continuing strength in exports, even as demand for Japanese products from the US declines, and from the Asian tigers and the EU slows. Te source of the extra demand is evidently China, and now other emerging economies like Indonesia, Vietnam, India, Brazil and Russia. As long as these emerging economies keep expanding rapidly, Japan can sustain. But for how long will this be? Inflation is becoming a real bugbear, and the situation in some of these economies (especially Vietnam and Russia) is in danger of turning critical. There is a certain irony in the fact that inflation may indeed be the undoing of the present Japanese expansion, but not domestic inflation but rather inflation among the emerging economies (the Economist had a useful summary of the current position here).
Japan Real Time Charts and Data
Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Japan related comment. He also maintains a collection of constantly updated Japan data charts with short updates on a Storify dedicated page Is Japan Once More Back in Deflation?
