IMF: India, Japan to drive Asia as China slows

The IMF upgraded its view for Japan, but warned that the prospects for a decisive break from years of recession and deflation hinged on deeper structural reforms by Prime Minister Shinzo Abe.

No kidding. Everone is waiting for that much-heralded "third arrow". No real sign of it yet, unfortunately. But even with their optimistic view, their projections for Japan are hardly something to write home about:

Japan’s growth is seen at 1.0% this year and 1.2% in 2016.

Is that the best over two years of sustained QE can buy Japan now? Does not bode well for the future.

@Jerseyboy

Exactly and even when Japan was booming, during the 1976 - 1987 period, it hardly let others eat at its table, why would this time be any different, if the article was correct?

Japan is caught in 1960s neo-mercantilist time trap - protected domestic markets, wealth accumulation through dependence on exports and government directed expenditure of the taxes on that wealth - and can't seem to find the mind frame to go to the next stage of a developed economy such as Britain did in the 19th Century and the US did in the 20th Century.

To be fair to Japan, she's not the only one, Germany and north east Asia are afflicted with the same ailment.

Japan is caught in 1960s neo-mercantilist time trap - protected domestic markets, wealth accumulation through dependence on exports and government directed expenditure of the taxes on that wealth - and can't seem to find the mind frame to go to the next stage of a developed economy such as Britain did in the 19th Century and the US did in the 20th Century.

Although not mentioned in this particular article, IMF Chief, Christine Lagarde was quoted over the weekend that she fears the world is moving towards a "new mediocre" -- low growth for a long time. Seems Japan is the epitome of this.

Yes, new mediocre sounds about right. But it doesn't have to be this way. I think (and pray) that there will be a point in the not too distant future where electorates wake up and kick out the useless politicians who have been dragging their feet and leaving it all up to central bank reserve creation through QE programs to try to get things going.

Yeah, as if! All the economy needs is more money in the financial system? Who really believes that? Not most voters, I should think.

The leadership change in India has make the country more prosperous and lucrative destination for investment. Probably its the best time to invest in Indian market.

RyokawaApr. 15, 2015 - 12:54PM JST

The leadership change in India has make the country more prosperous and lucrative destination for investment. Probably its the best time to invest in Indian market.

Not really. Modi is India's Abe, more interested in Hindu nationalism than improving the Indian economy. Abe is likewise with Japanese nationalism.

And besides Indians have to discipline themselves up a lot more to really improve things, Japan didn't get to sit at the bigboy's table by breaking business promises, a laissez faire attitude to a good day's work and taking a backhander for every economic favor rendered.

And besides Indians have to discipline themselves up a lot more to really improve things, Japan didn't get to sit at the bigboy's table by breaking business promises, a laissez faire attitude to a good day's work and taking a backhander for every economic favor rendered.

But no one seems to be too critical of India, as they often use the "world's biggest democrapcy" excuse. Corruption levels are equivalent to China's. Pollution is worse (Delhi is more polluted than Beijing): http://www.nytimes.com/interactive/2015/02/05/world/asia/delhis-air-more-polluted-than-beijings.html?_r=0. Almost 50% of Indians have no access to clean toilet, hence open/public defecation. Yet, it gets 1/10th the bashing of China or even Russia, by the media. What gives?

@maglev101 You have no proof the corruption levels in India are equivalent to China's. You can only evaluate such things with a free press, which China doesn't have. Power breeds corruption and there are no limits on the power of the communist party.

India is and always will be mired in corruption, latitude, class and caste discrimination, and violence towards women. Sure it is democratic, but its literacy rate is shockingly low, its urban environment a disaster, and its infrastructure in shambles.

China is not great, but far better. The supply chain networks flowing it and through plus located in China are the engines of growth for the world for the next few decades, even if slowed down. Japan plays some important role in that system but India not so much. There is enough organic growth potential in India that will generate modest growth but not to the extent that it will be a locomotive,

The IMF is hardly the most reliable organization. Ask Joe Stiglitz.

"Japan is caught in 1960s neo-mercantilist time trap"

what's wrong with "neo-mercantilism."? It created unprecedented levels of growth, stability and an expanding middle class that became the foundation of our prosperity today. And the original old-time mercantilism fueled the rise of the West powers.

Things unraveled from the 80s, from the adoption of today's "free market" and "free trade" supply-side BS policies. Since then, we've lurched from one crisis to another.

JeffLeeApr. 16, 2015 - 06:13AM JST

what's wrong with "neo-mercantilism."? It created unprecedented levels of growth, stability and an expanding middle class that became the foundation of our prosperity today. ......Things unraveled from the 80s, from the adoption of today's "free market" and "free trade" supply-side BS policies. Since then, we've lurched from one crisis to another.

Utter rubbish. Neo mercantilism is like a professional sportsman using health damaging performance enhancing drugs during their career. The end result is a damaged finished product - Japan, South Korea and China have made themselves incredibly vulnerable to currency risk, particularly with the dollar - and who is not to say, just like with the sportsman, the victories achieved, could not have been achieved without the performance enhancing drugs? The end result would have been a healthier more well balanced political and economic nation state.

And of course, like with the discussion on the Japanese national debt, you miss the obvious. Neo mercantilism can only be successful if a few are practicing it and the majority allow you to practice it; conditions very absent in the current world economy.

And the original old-time mercantilism fueled the rise of the West powers.

You really have to expand your reading a little further than Dani Rodrik, who has been laughed down on this point. Mercantilism was the least important variable to the rise of the Western powers. More importantly was technological sociological and political variables/changes in Western Society and most economic historians agree that Western supremacy would have been achieved without mercantilism, and the end result would have been a lot more morally palatable than it was.

"You really have to expand your reading a little further than Dani Rodrik,"

Who is "Dani Rodrik"?

"Neo mercantilism can only be successful if a few are practicing it and the majority allow you to practice it;"

Protectionism is still tolerated and alive today in the US, and has produced the nation's greatest industrial success stories. Boeing Airliners (protected from total ban on German and Japanese aircraft production) wouldnt be around today if left open to "market forces" from 1045 onward. We'd all be flying in Junkers and Messerschmit planes.

And pick-up trucks, which are ring-fenced by tariffs, are Detroit's few success stories.

The "free trade" of the future will be an exchange of goods more highly subsidized than before. (Japanese officials say they will raise subsidies significantly on a range of goods should TPP and other deals go ahead, and they wont be the only ones.)

JeffLeeApr. 16, 2015 - 08:50AM JST

Who is "Dani Rodrik"?

Probably one of the most famous living economists on globalization and Harvard professor.