Japanese stock market hits post-2008 high

As the Nikkei hits its highest point since 2008, the president of the World Bank has welcomed Japan's plans to steer its economy back to growth, saying 'it's important for the region but it's important for the entire world.'

by Michael Northcott
Last Updated: 19 Aug 2013

Confidence in Japan’s economic future soared yesterday, as the country’s Nikkei stock exchange topped 13,000 points for the first time since the global financial crash. The rise materialised after the government announced plans that will effectively result in the first inflation the country has had for decades. 

The Nikkei 225 index rose 4.7% at its highest point, touching 13,225 – a height it has not reached since August 2008, mainly because the Bank of Japan announced on Thursday that it is planning to double the country’s money supply within two years. The president of the World Bank, Jim Yong Kim, said: ‘The critical thing is [that] a growing Japan is good for everybody. It is important for the region, but it is important for the entire world.’

Japan has spent the last two decades beset by a strong yen (and therefore limited export demand) and almost continuous deflation. Economists say that for this reason, companies are reluctant to invest in new projects and consumers are less willing to buy stuff. The new measures are aimed at achieving some price growth, ending that deflation and hopefully getting the Japanese economy out of its stagnant state.

And even if the measures do not have the desired effect, the Bank of Japan’s new governor, Haruhiko Kuroda, has promised that he will be willing to increase the money supply yet further. Now we have to wait to see if Japan can get out of its economic mire…


To read MT's feature on where Japan's economy is at, and where it's going, click here...

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