Japan has strong economy but for how long ?

Tokyo, Japan. The Asian powerhouse is set to celibrate its longest sustained growth in over a decade, but worry over security at home, the Fukushima nuclear disaster and being a target of North Korea, tempers the celebration of the land of the rising sun.

Japan is enjoying its longest run of economic growth in more than a decade. The world’s third largest economy has expanded 2.2% in the first three months of the year, according to official data. It’s the fifth quarter of growth in a row for Japan, the country’s longest winning streak since 2006. But it is not all cherry wine and sushi right now.

China’s economic rebound has helped Japan maintain its longest streak of economic expansion in 11 years, but economists are warning the pace could slow in the coming quarters as Japan juggles North Korea, a nuclear waste zone and trying to continue its economic success.

These latest numbers confirm, “the Japanese economy remains on solid footing,” Naohiko Baba, chief Japan economist at Goldman Sachs, said in a research note. A pickup in spending by consumers and a rise in exports helped drive the growth.

Finance experts, however, see the beginnings of a cyclical change in China. “A slowdown in Chinese growth will be more evident as we head toward the end of the year,” said Izumi Devalier, chief Japan economist at Bank of America Merrill Lynch.

Prime Minister Shinzo Abe has been trying for the past four years to fire up the Japanese economy through an ambitious set of policies dubbed “Abenomics.” Last year, Abe’s government stepped up its own efforts to spur growth, announcing a big stimulus package.

Much of the export recovery has been driven by China, where a halt in capital outflows and fiscal stimulus have helped stabilize growth. But economists at BNP Paribas see signs that the recovery could be peaking, pointing to a slowdown in industrial output, imports and sales of automobiles in China.

Japan has struggled for decades with sluggish growth and falling prices.The central bank has gone to extreme lengths to spice up the economy, buying huge amounts of Japanese government bonds and taking a key interest rate into negative territory. How long the growth will continue is not clear, but the sun rising in the east, always sets in China.


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