Sunday, August 10, 2003

Rounding out our Sunday evening / Monday morning survey of the Big Boys' economic fitness, Japan continues to be running as if under water. I guess that's better than drowning.
Japan will report second quarter gross domestic product growth figures on Tuesday. HSBC expects Japanese GDP to be unchanged from the previous quarter as a result of weakness in private consumption, public investment and net exports. Weak domestic demand has left the Japanese economy dependent on exports to drive growth and the National Institute expects that for 2003 as a whole, Japanese growth will pick up to 0.7 per cent, from 0.1 per cent in 2002.
If the US really does end up growing at around 3% for 2003 while Japan grows at 0.7% and the eurozone at 0.6% (per the same FT article), we could see the global economy completely blow a gasket in early 2004 as the US current account deficit hits 6% of GDP. Yes the US economy can walk on water some of the time, but George W. can't defy gravity forever. And the bigger those deficits go, the harder . . . well, you know the rest.

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