China 'to overtake Japan' as second largest economy

China is expected to overtake Japan as the world's second largest economy as GDP growth in Japan slowed to 0.1% in the second quarter.

After two quarters of strong growth, GDP growth ground almost to a halt in Q2, according to preliminary figures released today. The slowdown was driven by domestic demand falling 0.2% and turning negative, leaving net exports to support overall growth and threatening to plunge the country back into recession. "Slower global growth and a strong yen will hit exports in the second half, making a return to recession ever more likely. At the same time, there is no prospect of an end to deflation," says Lombard Street Research economist Michael Taylor. He says the Japanese authorities ar...