The economies of China, Japan and South Korea account for about 25 percent of world output. In the fourth quarter of last year, they grew at annual rates of 7.7 percent, 2.7 percent and 4 percent, respectively. Who says better? None of the economies of comparable size.
And Japan looks like it’s just warming up for a more balanced stride of economic activity. As it befits the third-largest economy in the world, 69 percent of Japan’s fourth quarter growth was accounted for by domestic demand. That is a decisive and welcome break from the traditional export-led growth, which had kept Japan living off the rest of the world during most of its impressive post-war economic development.
This new composition of Japanese growth also makes irrelevant the fear expressed by some observers that the yen’s 12 percent trade-weighted depreciation over the last twelve months was a setup for an export tsunami.
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