Japan emerges from recession

Japan’s economy grew 0.9 per cent in the second quarter, becoming the third G7 country after Germany and France to pull out of recession, according to preliminary figures released on Monday. But the growth, the first in five quarters, slightly lagged forecasts and analysts said it will be a long road to a sustained recovery in the world’s second-largest economy.

“Today’s data was driven by stimulus steps in Japan and overseas, so Japan’s economy is far from self-sustaining growth,” said Kyohei Morita, chief economist for Japan at Barclays Capital. “The growth level for the July-September quarter will likely be similar to that of April-June, and the pace of growth is expected to slow down thereafter as the effects of government stimulus run their course.”

European Central Bank Governing Council member Axel Weber also warned against assuming the financial crisis had passed. The German economy in the second quarter, posted a surprise 0.3 per cent expansion that has boosted hopes of recovery in the wider euro zone.