Japan’s Economy Could Grow – Will The ETFs Follow?

It hasn’t been the easiest year for Japan and its exchange traded funds (ETFs). Its largest ETF by trading volume is the iShares MSCI Japan Index (EWJ), and it’s down 6.8% year to date. But the Japanese government is predicting that things will pick up some in 2008, according to the Associated Press.

The forecast is that the economy will grow 2% next fiscal year — although the economy minister said the target could be a challenge to reach if oil prices remain high. If the U.S. economy keeps slowing, it could hurt, too, because Japan is the U.S.’s largest export market.

If Japan’s top economic council puts reforms on the fast track, as was reported earlier this week, the country could be primed for a turnaround sooner rather than later.

A few other Japan-related ETFs and their recent performance:

• iShares S&P/TOPIX 150 Index (ITF), down 7.4% year to date
• WisdomTree Japan Total Dividend (DXJ), down 9.2% year to date
• SPDR Russell/Nomura Small Cap Japan (JSC), down 13.1% year to date