Japan Returning To Recession?

 

 

Well, if it did it certainly wouldn’t be surprising.  There’s not that much worse than what the country endured last week, with the extent of its earthquake and tsunami.  So why is this enough to make headline news?  Well, because what’s newsworthy is that the country looks set to “become the first Group of Seven member” to go back to that recession status following the easing of the global financial crisis.

Statistics and Truth

Although it is said that there are lies, damned lies and statistics, in Japan’s case it seems like the figures are speaking for themselves.  The G7’s yen sales depreciated the currency the most since September to ¥80.58 per US dollar at Friday's close in New York.  This is very different to its postwar peak of ¥76.25 on March 17.

European Banks Band Together

The potential problems of Japan’s economy and currency following the country’s disaster have led various European banks to join with the Bank of Japan “in the first co-ordinated intervention by the G7 since the launch of the euro a decade ago.”  It is anticipated that the US Federal Reserve will be joining this effort too.  It is hoped that such action “may help corporate sentimate to recover, a key factor in reviving growth, along with public spending said Takuji Aida, UBS AG economist in Tokyo.

For sure when there is such a strong economic force working together the economic recovery of a country stands a way greater chance than it slumping back into a recession.  And if that is the case, then the global economy faces a far greater likelihood of being able to recover which will benefit everyone.  So let’s hope the European and American banks put their money where their mouth is vis-à-vis Japan’s recovery.

 

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