Home demand to drive Japan growth

Domestic demand will fuel economic growth in Japan in the next financial year, its government has said.

The economy is forecast to expand by 2% in the 12 months from April 2008, although the government warned that a US slowdown could jeopardise this.

However, government minister Hiroko Ota said that in the current financial year, Japan would see GDP growth of 1.3% - lower than previously forecast.

The Bank of Japan is this week expected to peg interest rates at 0.5%.
Lacklustre growth and lingering deflationary pressures in the world's second largest economy mean that the bank is expected to refrain from raising its key rate until the latter half of 2008, analysts say.

Mrs Ota said that while domestic demand would be playing a key role in boosting the nation's economy, growth in consumption would be limited because "wage increases will likely continue to be moderate".

She also warned that if the slowdown in the US - Japan's largest export market - continued then next year's growth "may be lower than the projection".

Higher crude oil prices could also have an impact, Mrs Ota said.

Investors enter 2008 in fog of uncertainty

By Jeremy Gaunt - Analysis
LONDON Will the U.S. economy fall into recession and spread its woes elsewhere? Will financial markets dry up in a cash drought brought on by the subprime debacle?

With such Rumsfeldian "known unknowns" as a backdrop, global investors are heading into 2008 with less certainty and less consensus about what to do with their money than has been the case for some half a decade.

Consider the case of Legal & General Investment Management and Morley Fund Management, two large British investors.

L&G is looking to 2008 to produce what it calls "sogflation" -- soggy growth with persistent inflation. The result: It expects cash to outperform equities. Accordingly, it is underweight equities and neutral to overweight bonds.

Not far away across central London, meanwhile, Morley is expecting economies to rebound after a recent slowdown and for central banks to contain the credit crisis. The result: It is overweight equities and underweight bonds.

"Although we recognize the risks ... we expect economies to pick up steam from here," said Morley senior economist John Ip.

Such divergence should not, perhaps, be surprising given the kind of volatile year financial markets have had in 2007. After rising steadily for most of the year, major equity markets began ebbing and flowing sharply in summer.

On a year-to-date basis, for example, MSCI's main world stock index .MIWD00000PUS was up nearly 13 percent in July, down 1.5 percent in August, up 16.5 percent in November and is heading into the last weeks of 2007 up around 7 percent.

Time names Putin "Person of the Year"

WASHINGTON Russian President Vladimir Putin was named Time magazine's "Person of the Year" for 2007 Wednesday for bringing his country "roaring back to the table of world power."
Putin, a former KGB official who was picked from obscurity in 1999 by then-president Boris Yeltsin, will appear on the cover of Time as the person the editors believe had the greatest impact on events this year, for better or worse.

"He's not a good guy, but he's done extraordinary things," said Time managing editor Richard Stengel, who announced Putin's selection on NBC's "Today Show."

"He's a new tsar of Russia and he's dangerous in the sense that he doesn't care about civil liberties; he doesn't care about free speech; he cares about stability. But stability is what Russia needed and that's why Russians adore him."

The choice came days after Putin announced a plan to hold onto power after his term ends. Putin said Monday that if his close ally, Dmitry Medvedev, wins next year's presidential vote, he would serve as Medvedev's prime minister.

The Russian president beat out several rivals for the Time distinction, including former U.S. Vice President Al Gore, British author J.K. Rowling, Chinese President Hu Jintao and U.S. Commander in Iraq Gen. David Petraeus.