Japan economy set to show growth

Japan has been cautious in its economic outlook Japan's economy is tipped to show growth for the three months to June, after showing four consecutive quarter-on-quarter contractions. Analysts predict growth of 1% during the quarter, after shrinkage of 3.8% in the previous three-month period. The data, released on Monday, could mean the recession is over in Japan. Recent figures have shown other nations are also coming out of the recession, including Germany, France and Hong Kong, a sign the slowdown is easing. Not worsening Japan is heavily reliant on its exports so growth overseas could bode well for its recovery. But while the worst might be over, the pace and depth of the recovery will rely on whether Asia can be a "true engine of global growth", wrote the Bank of England's Andrew Sentance said in the Sunday Times. Mr Sentance, who is part of the bank's rate-setting monetary policy committee, said consumer demand from Asian nations would have to increase to boost growth. Japan's economy - like other Asian nations - is heavily reliant on exports. The slowdown in the US has hit it hard as American consumers have limited their spending. China's government has made a point of saying that recovery will have to be based on domestic demand. "The prospects for global recovery depend on whether Asia can become a true engine of global growth, not simply by meeting demand originating in America and Europe but propelled by consumer spending and investment in this key region," wrote Mr Sentance. In a recent Bank of Japan report, the central bank underlined its cautious view of the economy. While it said conditions in the world's second-largest economy had stopped worsening, it warned that unemployment would stay high and consumer spending low. Last month, the bank forecast that Japan's economy would shrink by 3.4% in the 12 months to 31 March 2010. Beating forecasts The French and German economies both grew by 0.3% between April and June, bringing to an end recessions in Europe's largest economies that have lasted a year. Analysts had not expected the data, suggesting recovery could be faster than previously expected. And Hong Kong recorded growth of 3.3% in the three months from April to June. That data was also better than had been expected, with the government subsequently increasing its forecast for growth in the whole year.