Do Votes Matter to Japan and Germany?

Do Votes Matter to Japan and Germany? - at www.moneyweek.com - the best of the international financial media

Unflattering comparisons have been made in recent years between Germany and Japan. Japan, once the darling of the global economy, has been in the doldrums for years and Germany has been viewed as heading the same way. The economic underperformance of these two countries against the pacesetter in the global economy - the US - can be demonstrated by the fact that, since 1995, real GDP in the US has growth by almost 40%, compared to 15% in both Japan and Germany.

Despite the tawdry longer term economic data, two of the best-performing major equity markets so far this year are Germany (up 15%) and Japan (up 13%), against a backdrop of flat US equity prices. The reasons for the significant relative outperformance are numerous but at the heart of those adopting a more bullish longer-term outlook is the belief that fundamental reform will be forthcoming in these two former economic powerhouses. Optimists view the recent and upcoming elections in these two countries as a catalyst for change.

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