Japan: Slow and Steady Does It

Amid sluggish domestic demand, moderate growth should be bolstered by export strength. Markets are bracing for possible rate hikes

Japan's economic growth should continue at a steady, though unexciting, pace in 2007. Recent Japanese economic data are consistent with the Bank of Japan's (BoJ) semiannual outlook, issued in October, projecting continued moderate expansion. Growth in 2007 is forecast at near the 2% pace of recent years, including the estimate for 2006. This is supported by ongoing momentum in exports and capital outlays, although consumer spending remains disappointing, despite gains in employment.

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