(Export Development Canada – Peter G. Hall)
Last week began with double-barreled news from Japan that grabbed the airwaves. The industrial giant was bumped out of second place among world economies by China. This occurred as growth in Japanese GDP slowed to a crawl in the second quarter. The world seemed shocked, but it shouldn’t have been. China’s ascendancy was as imminent and predictable as Japan’s nascent slowing.
Progress in the post-recession months seemed to fuel hopes that at long last, the Japanese economy was turning the corner. For a six-month span starting last October, GDP growth averaged 4.2% at annual rates, quite a feat for Japan. But the optimists seemed to forget that even this growth still left the country’s GDP a hefty 4.6% below peak, thanks to the pounding that production endured in the recession. They were reminded when the economy eked out just 0.4% growth in the second quarter.
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