June 11, 2008 | posted by Michael Baxter in Japan |

In some parts of the world, growth is still on.

Last month we told how Germany enjoyed a stunning 1.5 per cent worth of growth in the last quarter. 

At the time, we told how Japan too put in an impressive run, expanding by 0.8 per cent.  But now, the figures relating to the economy of the Rising Sun have been tweaked.  Now they are saying Japan grew by 1 per cent in the quarter.

Not so long ago, people were talking about Japan being on the verge of recession; well, they were wrong.

Julian Jessop from Capital Economics said: ”Growth will inevitably slow from this unsustainable pace,” but “the stronger starting point means that growth could now slow even more sharply in the remainder of the year and still beat the markets’ low expectations. Indeed, even if the level of GDP is now flat from end Q1 to end Q4, growth for the full year would still come in at around 1.5 per cent.”

Economists reckon Japan should be able to grow by 1.5 per cent a year, in a sustainable, not inflationary, way.  But assuming growth does indeed come in at 1.5 per cent or more this year, then Japan will have enjoyed growth either on, or above, the sustainable rate every year for six years now.

This means one of two things: either Japanese inflation is making a comeback – actually, after years of deflation, this may not be unwelcome – or Japan’s sustainable growth is greater than economists have calculated.

Meanwhile, as Japan beats predictions, the boys from Brazil are doing even better. 

In the first quarter of this year, Brazil grew by 5.8 per cent on a year earlier.

The commodity and oil boom is helping.  Indeed, with all these oil finds we have written about previously, they could help a good deal more in forthcoming years.

Mind you, while a growth rate of 5.8 per cent might seem impressive to you, in fact it marks a relative slowdown.  Brazil expanded by 6.2 per cent in the previous quarter.

The Brazilian rate of interest is now 12.25 per cent, and its finance minister, Guido Mantega, has been trying to engineer a slowdown.  “We are not suppressing demand, it’s only a slight deceleration, it’s throwing a bit of cold water on the fire,” he said recently.

Or, to put it another way, he is attempting to dilute the punch bowl, just as the party gets going.