Clouds hovering over Japan despite good news

Clouds hovering over Japan despite good news
From left) ST foreign editor Ravi Velloor, senior economics correspondent Fiona Chan, Japan correspondent Kwan Weng Kin and deputy news editor Peh Shing Huei were panellists at the ST Global Outlook Forum.

THE man in the street may not yet feel better off and the absence of policy details may trouble economists, but Japan appears on track to shrug off decades of deflation that have hobbled its growth.

This was the consensus among panellists discussing economic prospects of the world's major economies at the second ST Global Outlook Forum last Friday. As they spoke, news reports from Tokyo said a key index for consumer inflation in Japan rose at its fastest pace in 15 years last month.

It gave rise to hopes that Japan's central bank remains on track to achieving its goal of a 2 per cent annual rise in prices for the second year running.

Indeed, when it comes to Japan, the world's third-largest economy, good news is not that hard to find these days.

According to the latest International Monetary Fund (IMF) forecasts, Japan's 2 per cent growth rate in 2013 will be the fastest among the G-7 group of developed economies.

Its stock market has gained 70 per cent since last December, shooting far past Wall Street's 25 per cent rise. Its corporate profits are projected to increase by 17 per cent, against the expectations of 3 to 4 per cent gains in Germany and the US.

But at the ST forum, sponsored by ANZ Bank and Mercedes-Benz, economists and this newspaper's own correspondents also noted some clouds hovering over Japan.

For starters, ordinary Japanese have yet to feel the impact of Abenomics, as Prime Minister Shinzo Abe's economic revival plan is dubbed.

The premise is that the "three arrows" of Abenomics - fiscal stimulus, monetary expansion and structural reform - will reverse the curse of downward spiralling wages, prices and spending seen since the 1990s.

The signs so far are mixed.

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