UK - Japan's economic recovery will be sustained over the long-term despite the threat of further market volatility, leading fund managers predict.
Merrill Lynch Investment Managers says the country’s economy will enjoy a long period of sustained growth even though it has historically experienced dramatic fluctuations.
Fund manager of the firm’s Japan Opportunities Fund, Hiroshi Tateda, said the fundamentals that had underpinned the current period of economic progress would continue to drive long-term growth.
He explained: “Today’s economic recovery in Japan is different from previous upturns, which were traditionally fuelled by government spending.
This time the upturn is being driven by the companies themselves, which have restructured, reducing their costs, bureaucracy and debt, and moved manufacturing abroad.”
He added: “Prime minister Junichiro Koizumi has helped this process, by pushing through economic reforms to improve corporate efficiency, forcing banks to tackle bad debts and refusing to bail out failing corporations.”
The change in the country’s fundamentals, which has seen profit levels soar to their highest point in more than 20 years, has been so marked that it has spurned the term “New Japan”.
Electronics firm Tokyo Electron is forecasting a sixfold increase in net profits this year and Yahoo Japan, the nation’s largest website operator, reported net profits almost double last year’s figures.
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