Japan putters along hard shoulder of the Asian economic motorway

Just as there is a two-speed Europe, it often seems, economically, Asia moves at two different speeds.

Having hardly touched the brakes during the global financial crisis, China and India are surging relentlessly down the fast lane. The Japanese economy, meanwhile, putters slowly along the hard shoulder. The contrasts are stark. Buoyed by strong domestic demand, India’s economy grew at an annualised rate of 6% in Q2. In China, stimulus packages and rapid loan growth could see GDP rising by as much as 8% this year. Japan’s output, however, may fall by as much as 6%. As investors, our response might seem obvious:  buy stocks in Asia’s high-growth markets and give up on Japan. That, I bel...