The Japanese economy managed to rebound in the first quarter, as governmentsupported spending ensured a return to GDP growth. The eco-car subsidy helped drive consumer spending, and public investment increased as earthquake-related reconstruction works got underway. The reliance on government support is worrying though, as an escalation of tensions in the eurozone is hurting consumer and business confidence, and this is likely to weigh on private sector spending as government support fades.
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