Aug 17 2009
Have we emerged from recession?
Today came the news that Japan has emerged from recession, following closely on Germany and France coming out of recession. Australia emerged from recession in the first quarter.
So is it all over? I’m not so sure. I think that what we’ve seen is an inventory correction. Retailers panicked in the last quarter of 2008 and first quarter of 2009 and stopped ordering new stock, and hastily sold what they had in massive sales. They didn’t want to get caught with stock they couldn’t sell. Therefore Japan and Germany, both large exporters, had a severe contraction in Q408.
But since then, retailers are carefully restocking. And that’s why we’ve seen Japan and Germany rebound. But will the rebound last? Only if there is sustained restocking by retailers. I’m not altogether sure there will be sustained restocking. Unemployment in the USA is still climbing, and the USA remains the engine of world growth. If their people can’t afford to buy much, then growth in Germany and Japan will stall. It’s not over yet in my opinion.
