Japan and United States bright spots in subdued global outlook

THE recent G-20 meeting of finance ministers in St Petersburg confirmed that the debate between growth and austerity is over — at least for now.

With protracted recession in Europe and slowdowns in emerging markets, concern about budget deficits has given way to apprehension about growth. In July, the IMF revised its global growth forecast downward for the second time this year.

Japan and the United States stand out as bright spots, but for different reasons. In Japan, prime minister Shinzo Abe has unleashed a combination of aggressive monetary and fiscal expansion along with promised reforms of the labour market, corporate governance, regulation, and trade.