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japan secures economic turnaround Japan secures economic turnaround
By Deborah Cameron, Tokyo
January 31, 2006

THE revival of Japan, the economic juggernaut, seems almost guaranteed after industrial production rose again this month due to strong domestic and export demand.

It was the fifth straight month of improved performance, the longest unbroken run since 1999, underlining the increasingly bullish air surrounding the world's second biggest economy.

"Strong overseas and domestic demand are fuelling production as well as supporting overall economic growth," said an economist with Deutsche Securities in Tokyo, Sieji Adachi.

The performance of Japan, which maintains trade surpluses with both China and the US, is linked to the growth in those two economies. But should they stumble, there is still enough domestic impetus in the Japanese economy to maintain the recovery, according to ING senior economist, Rob Carnell.

What happened in China was "very relevant" and the US "was key" but even if they went down, Japan would remain strong and "would do rather better than Europe," Mr Carnell said. Even a rising Japanese currency was not likely to be a handicap, he said.

As if to underline the interweaving of the economies of Japan and China and the scale of the deals buoying Japan's industrial sector, Mitsubishi Heavy Industries yesterday signed its sixth contract for a furnace gas turbine combined-cycle power generation plant in China. The new contract is worth ¥20 billion ($A227 million), according to industry estimates.

Car makers were also among the economy's consistent star performers with the Japan Automobile Manufacturers Association saying yesterday that vehicle production rose to 10.8 million in 2005, up for the fourth straight year.

Attributing the success of Japan's motor industry to energy efficiency, the association said that almost half of all cars, trucks and buses produced in the country had been exported.

Industrial production in Japan rose by a seasonally adjusted 1.4 per cent in January, following a 2.7 per cent increase in the three month to December 31, the biggest gain in two years.

The optimistic share market jumped at the news, pushing the Nikkei to 16,551 points, up 90.55, and at one point in the morning topped 17,000 for the first time in almost six years.