Saturday, April 27, 2013
How Japan's New Stimulus Will Affect the U.S. Economy
Aggressive economic stimulus recently in Japan is expected to boost the world economy and greatly affect US economy as well. It is true because in the long term, ending a long period of deflationary economy helps Japan more engage in trading relations with US. Low interest rates thanks to Open Market Operation helps attract investors who expect high return. Export industries absolutely gain edge over depreciated Yen. In the short term, as the global recession, especially European crisis is still ongoing, we should only expect modest growth from Japan but overall, this is certainly a good signal for the world economy.
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I think that Japan is definitely headed in the right direction to end deflation and experience renewed growth, but an article I read recently had an interesting concern for Japan's future. Shinzo Abe is very much a nationalist and people speculate that he might visit a war shrine which deifies Japanese war heroes/criminals. There is concern that this will provoke China, who is Japan's biggest trading partner. Trade between the two has already suffered thanks to some territorial disputes.
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