Japan’s economy contracted in the second half of 2012 and it might grow 0.8 percent in 2013. Japan’s growth is partially affected by the territorial conflict with China over the Senkaku islands, the World Bank said in a report on Tuesday.
China and Japan are the most developed economies in the world after the United States. The relations between the two countries have deteriorated sharply since September, when the Japanese government purchased the islands that China claims in the East China Sea.
Since the conflict began, Chinese refused to buy many Japanese products, including cars and electronics. Between June and November 2012, the value of Japanese exports to China fell by 17 percent. This situation contributed to a 3.5 percent annualized drop in Japan’s growth in the third quarter.
“In Japan, the economy appears to be contracting – in part because of political tension with China over the sovereignty of islands in the region,” it is reported in the World Bank’s twice-yearly Global Economic Prospects analysis.
If the two countries will improve their relations, Japan could achieve growth rates of 1.2 percent in 2014 and 1.5 percent in 2015. This situation could also boost the global recovery, according to the international press.