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By Bradley Gerrard | Published Nov 18, 2011

Economists keep faith in Japanese growth

Simon Ward, Henderson Global Investors’ chief economist, said most of the impetus behind the positive 1.5 per cent GDP growth for Q3 came from the technical effect of rebuilding following the March earthquake.

But he said the Japanese economy does have factors in its favour in spite of the continuing eurozone sovereign debt crisis, such as having strong trade links with the US and the rest of Asia.

He said: “This is positive because the US has been doing better-than-expected in Q3 with a 2.5 per cent growth and Q4 is off to a reasonable start. Indicators in China have been relatively encouraging too.”

Meanwhile, Peter Dixon, Commerzbank economist, said: “The post-earthquake reconstruction element is going to be a major factor which drives growth over coming months.

“It will probably be for four to six quarters, perhaps more, before the effects start to fade.”

However, Mr Dixon said even if the economy does rebound in the next one to two years, “nothing good” will come in the long term as the country is “condemned to a period of prolonged slow growth because of the demographics”.

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