The speed and extent of the collapse in Japanese exports should at least mean that the immediate adjustment to weaker global demand has now largely run its course. The fall-out in terms of the damage to confidence, additional production cuts, growing spare capacity and a weaker labour market will linger rather longer. Nonetheless, the Japanese economy has already taken a very large hit from the world recession and there should not be much more bad news to come. The upshot is that Japan is a prime candidate for a “V”-shaped recovery, with a return to growth (on a quarterly basis) as early as the second quarter.
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