There are warnings that Japan’s economic recovery could cause a bout of inflation. The good news I get out of this article is two-fold.  For one, the economy will grow 2.2 percent in 2007, the fastest since 1996, the MOF estimates, and most likely the beginning signs of good things to come in Japan, as Japan’s Baby-Boomers lag US Baby-Boomers by roughly 10 years.  Are we starting to see the beginning stages of what will lead to our next real estate market push in Hawaii?

Secondly, Japan’s low rates are encouraging companies to refurbish factories and add capacity, fueling wage growth and inflation. Business investment surged 13.6 percent to a record in the first quarter from a year earlier, the Finance Ministry said on June 3. The jobless rate fell to 3.8 percent in April, the lowest level since 1998.

Refurbishing factories, adding capacity, and business investment is an indication of economic growth to come.  Obviously the effects don’t happen overnight.  Let’s see how this one plays out with regard to Hawaii.  To read more on this read, The next big market boom for Oahu?  Also Manufacturing News Is Good. Any thoughts?