Japan’s economy appears to have suffered a second successive quarterly contraction at the end of 2012. The weakness was broad-based. Measures of industrial output, investment, consumer spending and exports all declined in Q4. But this is arguably old news. The arrival of a new government has led to a shift in sentiment not just in financial markets but in the wider economy too. Surveys conducted since the election in mid-December, including the Shoko Chukin survey of SMEs, the manufacturing PMI and the Economy Watchers’ Survey, reveal big gains in confidence. Of course, this raises the pressure on the government to follow through on pledges to revitalise the economy. But Japan is at least starting 2013 on a brighter note.
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