Modest growth predicted to continue

The cyclical recovery in the Japanese economy that began early in 2003 has continued. The drivers continue to be exports (mainly to Asia, but some components for onward shipment to the US in final products), and domestic private capital expenditure. Income is now rising year on year. An increase in overtime payments, no fall in base wages and an rise in last summer's bonuses have pushed the index well into positive territory. Winter bonuses are expected to rise by 1.48%. This augurs well for consumption. Economic growth is now expected to be 1.8% real for the year to March 2004, but nomin...