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Japan: Spending at last

Economy shows further signs of life

The positive economic data from Japan continue to trickle in and confound the naysayers. In addition to a first-quarter GDP growth figure of 4.9%, albeit revised downwards from a provisional 5.3%, two significant events occurred that suggest the Japanese are finally abandoning the conservative ways that have been important reasons for the country's economic inertia.

In June, the Bank of Japan announced that for the first time in nine years Japanese companies raised more capital than they spent on repaying debt, a sign that managements are starting to invest again after years of restructuring and financial dithering.

Japanese consumers have also finally joined the party. For the first time since records began, they withdrew more money from their bank accounts than they saved and have started to invest more heavily in domestic and foreign securities.

Growing signs of investment among Japan's companies and consumers point to increasing confidence domestically that Japan's slow recovery is strengthening. It is still early days, however, and as any economist will point out, the country's economic recovery remains finely balanced. But at least the indicators are pointing in the right direction.

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