EDITORIAL: Japanese economy

Concerns about a double-dip recession--sliding back into recession after a short-lived recovery--have mostly dissipated.

As widely expected, Japan's gross domestic product contracted in the October-December quarter from the previous three months, according to preliminary government data released Monday. The decline was blamed mainly on the wearing-off of the effects of the government's economic stimulus measures, such as the eco-point program to promote sales of energy-efficient home electric appliances.

But key economic indicators, like industrial output, clearly suggested that the economy remains on a recovery path.

Japan's rebound has been supported primarily by economic growth in emerging countries.

Aggressive efforts by Japanese companies to capitalize on swelling demand in these countries, such as developing new products tailored to the fast-growing markets and ramping up investment for expansion, are beginning to pay off.

Another piece of good news for the Japanese economy is receding fears about a U.S. economic downturn. The Federal Reserve Board's second round of quantitative easing, called "QE2," and President Barack Obama's decision to extend Bush-era tax cuts in a bold compromise with the Republicans have combined to stoke consumer spending.

The New York Stock Exchange is now on an upward trajectory.

As a result, the yen has stopped climbing against the dollar, and the currency market has regained stability.

Stock prices in Tokyo have bounced back to life as investors around the world have started returning to the stock market in droves.

Immediately after the collapse of U.S. investment bank Lehman Brothers triggered a global financial crisis in autumn 2008, Japanese companies were stupefied as their global business strategies based on traditional dependence on Western markets had suddenly become obsolete.

From 2009 through 2010, Japanese companies focused on pulling themselves together for the development of new broad-based strategies for the entire world, including emerging economies, and redistribution of management resources.

This year, they are regaining self-confidence and making bold strategic moves to expand globally with renewed determination.

The trend has been epitomized by a flurry of major strategic alliances, including an agreement between Nippon Steel Corp. and Sumitomo Metal Industries Ltd. to enter merger talks and NEC Corp's decision to set up a joint personal computer venture with China's Lenovo Group Ltd.

Japanese firms are also stepping up their efforts to globalize their management, as evidenced by Olympus Corp.'s decision to promote a British executive to the post of president.

A growing number of Japanese companies will start making such aggressive moves to expand their global presence in the coming months.

But there are still many causes for worry both at home and abroad.

Excess liquidity sloshing around the world is driving up the prices of food and raw materials, raising concerns about inflation, especially in emerging countries.

In Europe, the sovereign debt crisis keeps shaking confidence in the euro.

Heightened jitters about the world economy could trigger a new round of the yen's appreciation.

At home, political momentum for fiscal rehabilitation remains alarmingly weak despite the recent downgrade of Japan's sovereign debt by a major credit rating agency.

In addition to the murky outlook of the budget for the new fiscal year, a Diet preoccupied with partisan bickering is arousing anxiety among the public.

There is, fortunately, a positive mood in Japan's business community.

Signs of forward-looking politics would do a lot to help accelerate the expansionary trend among Japanese businesses.

Political leaders should at least make sensible efforts to avoid becoming a drag on the private sector.

It has also been confirmed that China's GDP surpassed Japan's last year. The news should be taken by Japan as a signal to finally forget its past success and move ahead.

--The Asahi Shimbun, Feb. 15