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The New Year began with the United States barely avoiding sequestration that many economists agree would have been a giant setback for the U.S. economy that would pile on to the global economic troubles. Not the way to start things off. With the major economies of the world still struggling to return to the growth needed to bring down unemployment there may be good news after all.
China, who faced a serious economic slowdown in 2012, seems poised to grow again, albeit at a lower rate than they have been accustomed to. In December exports increased by over 14% from a year earlier. With China still being the dominant manufacturer of the world these types of increases can indicate a growth of consumption by industrial nations, of which almost all import Chinese products. China is also increasing activity domestically, which is a potential signal for companies looking to sell their goods to the nearly 1.5 billion large Chinese market. General Motors announced, with the release of its new Chevrolet Corvette, that for the first time it was opening the classic American muscle car for sale in China. With China’s money supply now larger than the United States and an easier access to credit China is beginning to show signs of becoming a nation of consumers that global corporations always hoped they would be.
Japan has also taken bold action in an attempt to invest its way out of the morbid growth it has experience for over a decade now. This past Friday Japan approved a stimulus package of more than $100 billion. A wide variety of tactics is planned for the money including infrastructure improvements, subsidies for companies and financial aid for small businesses. Though setting expectations for this type of spending is notoriously inaccurate, the Japanese government is hoping to add two percent to economic growth and 600,000 jobs. Japan is already infamous for its willingness to drive up its debt in return for government spending seems to be following the same course of action. They hope this time they will see real growth as a result.
While China and Japan both face tough issues home and abroad, the measures they are taking to boost their economies could signal a turnaround for their recent misfortunes. The big question that remains in such a globally connected world is what is the rest of the planet going to do to increase their prospects?
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