Tuesday, February 17, 2009

Crisis Japanese Economy

It is hard to believe the Japanese economy was once held up as a model for being the best performing economy in the world. The truth is the Japanese economy is facing tremendous problems.

After staggering along for the past two decades with sluggish growth and deflation
  • Japan has seen a budgeoning national debt upto 195% of GDP and forecast to keep rising. Japan debt
  • Japanese Debt keeps rising

  • Debt interest payments are becoming an increasing burden(history of debt)
  • GDP fell at its fastest rate for 35 years, a fall of 3.5% in the last quarter or an annual decline of 12% (one definition of depression is negative growth of over 10%)
  • The government have tried frequent monetary and fiscal stimulus but they don't seem to have worked. Interest rates are 0.1% are can't be cut any further. The deficit is so high, that fiscal stimulus border on the reckless.
  • It is an unprecedented level of government debt with no prospect of an imminent fall.
  • With an ageing population, demographic changes will worsen debt in future.
  • Japan's economy has relied to a large extent on exports and global demand. There is nothing they can do about the collapse in global demand. exports fell a record 13% in the fourth quarter of 2008. They are particularly affected by fall in demand for cars.


Michael Moore said...

Why is there a global fall in demand for cars?

Tejvan Pettinger said...

will answer tomorrow