3 Reasons Japan’s Economy and ETFs Could Be on the Upswing

Japan was an economy that was hit particularly hard by the recession, thanks to a tradition of frugality. But prices, production and consumption have stabilized, and the economy and related ETFs may be showing small improvements.

• According to the Bank of Japan (BOJ), “Japan’s economy has started to pick up” and the economy is “likely to improve gradually,” writes Myra P. Saefong for MarketWatch. The BOJ left rates steady at 0.1%, which is not having much of a stimulative effect on economic activity.

• The Japanese Central Bank stated that public investment, exports and production are all increasing, as stated in China View. Exports and production are expected to rise when other countries recover and begin to buy again.

• The Central Bank has hopes that this is the beginning of a two-tiered economy based on high domestic demand and greater foreign exports. The Democratic Party of Japan is aiming to change the Japanese economy into one centered on domestic demand.

Private consumption and housing investments remain weak. Furthermore, corporate profits, employment and income all remain depressed.

• PowerShares FTSE RAFI Japan (NYSEArca: PJO): down 1.2% year-to-date

• iShares S&P/TOPIX 150 Index (NYSEArca: ITF): up 1.6% year-to-date

• iShares MSCI Japan Index (NYSEArca: EWJ): up 1.6% year-to-date

Max Chen contributed to this article.