In Japan as well as South Korea the industrial output soared more than what was expected in December in an indication that due to draw down of inventories and a bounce back of export demand the global economy in this year will be strengthened.

The data which came from Japan is encouraging as it backs the central bank's view that the economy will possibly start growing in this quarter after a compression widely expected in the final quarter after the expiry of government incentives for car purchases.

Mounting factory output also gave rise to expectations that the Bank of Korea (BOK) will hike interest rates further in this year to cut down inflationary pressures.

More and more reliance on trade with adjacent nation of China is a risk to the viewpoint, because demand for South Korean and Japanese products could suffer if China tightens fiscal policy extremely to stem bubbles in its property market and slow rising prices.

The output figures seem quite strong, said a senior economist at Mizuho Research Institute in Tokyo, Yasuo Yamamoto.

In Taiwan and South Korea the inventory adjustment cycle for semiconductors has advanced and helped in Japan’s industrial output. The data back the Bank of Japan's scenario, but China poses the threat with their concerns of inflation.

Japan's industrial output went up by 3.1 percent in the month of December, higher than the forecast of a median market forecast of 2.9 percent increase because of strong overseas demand for electronic parts and cars, as stated by the Ministry of Economy, Trade and Industry on Monday.

The ministry had surveyed the manufacturing sector and it expects output to go up by 5.7 percent in the month January and fall 1.2 percent in the month of February.