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POLITICAL ECONOMY
Japan economy rebounds from post-quake slump
by Staff Writers
Tokyo (AFP) Nov 14, 2011

Japan to keep helping EU bailout: PM
Honolulu, Hawaii (AFP) Nov 13, 2011 - Prime Minister Yoshihiko Noda said Sunday that Japan was committed to helping the eurozone but declined to specify how much bond debt it would buy up in the bailout fund.

Speaking after a summit of Asia-Pacific leaders in Hawaii, Noda said that the eurozone bore the primary responsibility for sorting out its crisis but that the world's third largest economy was ready to assist.

"We want Europe to first roll up their sleeves and work on this. I believe this is the very first step to bring confidence to the marketplace," Noda told a news conference in Honolulu.

"This crisis is a matter that will have bearing for the world as a whole," Noda said. "If the proper stance is demonstrated, then we will make our appropriate contributions."

But Noda declined to state a percentage of bonds that Japan would buy in the continent's bailout fund. Japan was initially buying 20 percent of the debt of the fund, but the figure has recently decreased to about 10 percent.

Japan also has a mounting public debt and faces major challenges as it rebuilds from the catastrophic March 11 tsunami.

Klaus Regling, head of the bailout fund, the European Financial Stability Facility, visited Japan two weeks ago and said he was assured of help. He also visited China, which has made no firm commitments.


Japan's economy rebounded in July-September as efforts to restore supply chains and recover lost output in the wake of the March disasters helped it post its first expansion in four quarters.

Automakers and other key industries boosted output to meet pent-up demand after the earthquake, tsunami and nuclear crisis, but analysts warned that a strong yen and a global slowdown will weigh on the recovery.

The world's third-biggest economy grew by an annualised 6.0 percent in the July-September quarter, preliminary data showed Monday, the fastest pace since January-March 2010. The result was largely in line with market expectations.

On a quarterly basis, gross domestic product grew 1.5 percent in July-September, the data showed, compared to a 0.3 percent on-quarter contraction in April-June. The data is subject to constant revision, however.

"The positive growth came on the back of rapid restoration of (nationwide) supply chains after the disasters," said Motohisa Furukawa, the country's economic and fiscal policy minister, warning however that the recovery is moderating.

Recent flooding in Thailand has also complicated the outlook for Japanese firms from Sony to Toyota, forcing plant closures that have affected global production and prompting many to withdraw their full-year earnings forecasts.

"We have to pay adequate attention to downside risks, such as possible deterioration in foreign economies, rapid appreciation in the yen and the impact of damage from the Thai floods," Furukawa said at a news conference

Improving exports were the biggest contributor to growth in the third quarter, followed by private consumption.

On a quarterly basis, exports were 6.2 percent higher, while private consumption gained 1.0 percent.

The March disasters left 20,000 people dead or missing, devastated large areas of the northeast and sparked a nuclear crisis at the Fukushima nuclear plant.

The damage and devastation brought by the tsunami also shattered crucial component supply chains, forcing companies to shut down factories, slowing the nation's output and exports as the economy tipped into recession.

While Japan's producers have raced to restore output more quickly than expected, recent quarterly earnings have shown those efforts are being undermined by a strong yen that erodes repatriated profits, while demand wanes because of a global economic slowdown.

The yen has recently hit post-World War II highs against the dollar amid heightened market volatility as the eurozone crisis deepened, despite efforts by Japanese authorities to stage yen-weakening market interventions.

Japan "achieved temporary high growth in the process of normalising production, exports and consumption that had been lost after the Great East Japan Earthquake," said Naoki Murakami, chief economist at Monex Securities.

However, leading indicators have showed the recovery is slowing, he noted.

Data last week showed Japan's core private-sector machinery orders dropped 8.2 percent in September on-month, as uncertainty about the global economy causes firms to rein in spending.

"The economy is expected to slow to low growth from the October-December quarter because of the yen's strength that is weighing down corporate earnings as well as a delay in reconstruction demand," said Murakami.

Analysts say the economic impact of flooding in Thailand will emerge in fourth-quarter data, with exports to Europe also seeing a slowdown.

"The economy will struggle to grow at anywhere near this pace in Q4," said Capital Economics in a research note.

Japan is expected to soon pass a 12.1 trillion-yen ($156 billion) budget to finance post-quake reconstruction and boost the economy.

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Asia-Pacific leaders to cut taxes on green goods
Honolulu, Hawaii (AFP) Nov 13, 2011 - Asia-Pacific leaders representing more than half of the global economy committed Sunday to cutting tariffs on environmental goods to no more than five percent and reducing energy intensity.

In a joint statement after a summit in Hawaii, leaders of the APEC bloc -- which includes the United States and China -- said they would also eliminate non-tariff barriers that impede trade in green products.

"Taking these concrete actions will help our businesses and citizens access important environmental technologies at lower costs, which in turn will facilitate their use, contributing significantly to APEC's sustainable development goals," the statement said.

APEC economies will make a list of environmental goods next year and reduce tariffs to no more than five percent by the end of 2015, the statement said.

The statement also set an aspirational goal of reducing the bloc's energy intensity -- the amount of energy used compared with the economy -- by 45 percent by 2035.

The United States made the trade in green goods such as solar and wind energy a priority for its chairmanship of the Asia-Pacific Economic Cooperation forum, seeking a way to boost both job growth and environmental action.

But a senior Chinese official last week said that the goals set out by the US side were "too ambitious and beyond the reach of developing economies."

In an apparent nod to Chinese concerns, the statement said that APEC would cut tariffs while "taking into account economies' economic circumstances."

Action on the environment has come slowly in a number of countries, with China's carbon dioxide emissions on the rise and proposals to mandate action against climate change have died in the US Congress.

Despite indications that climate change is already taking a toll on the planet, carbon emissions around the world posted their biggest annual jump last year, according to US government data.



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Chinese President Hu Jintao warned on Saturday that the global economy recovery was under threat and called for efforts to boost growth and liberalize trade. "The global economic recovery is fraught with greater instability and uncertainty," Hu said during a speech in Honolulu ahead of a summit of Asia-Pacific leaders. Referring to Europe's sovereign debt crisis, he said the world must r ... read more


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