http://www.reuters.com/article/2012/01/17/japan-economy-report-idUST9E7NF05H20120117
This article discusses Japan and its struggle since the tragic earthquake. After months of picking up the pieces and rebuilding their economy, Japan has begun to see growth. However, they still are not out of trouble. All though the economy is picking up, Japan's exports continue to stay low. Mostly because the euro has weakened and as a result European demand for Asian exports has slowed. This raises the issue of Japans growth and reconstruction slowing from lack of demand. They are working to prevent deflation but if there is decrease in demand for products from Europe could it be out of their control?
6 comments:
It is definitely interesting to see the case of Japan, associating with its economics system, its economics history and its current situation as well. Since 1980s, Japan has been trapped in a long period of recession after its booming priorly. It is called the "lost 20 years". It's deflation, unemployment, stagnancy, slow GDP growth, and even socially and culturally regressive growth relative to other nations. Its government has been striving to save the situation. As one of the most important way to simulate the real economy, government spending on building infrastructures has shown lack of an impact at all. Because Japan is small in size with highly populated population. It is very much highly modernized everywhere. The natural reasons also limits its ability to grow after a certain point. It's lack of land limit its agriculture and production. International trade is the main support of its economy. It is interesting to see how it is associated to the commerce based capital system. The recent financial crisis and its following events also give Japan a harder attack. The earthquake destroyed its infrastructure, which does give this country a big disaster, however, on the other hand, it offers opportunity for its government to reinvest and rebuild.
This article interested me upon reading it. Seeing how Japan's economy relied greatly on the exporting of goods but in the end actually ends up slowing down their recovery. Looking in, the average person would think it’s obvious that after an earthquake there should be slow growth. But that’s not the only contributing factor. The decreasing value of the Eurodollar, especially against the yen, is also a main factor in the economic recovery. The demand for Japanese goods has decreased greatly due to the deflation. Will Japan return to its former healthy state if it has lost demand from one of its largest consumer?
I like how this article speaks volumes about a globalized world economy. If anyone remembers from Monetary and Fiscal policy, we learned that for a country to increase imports, its currency must lose comparative value with its trading partners. And vice versa to increase imports. It makes us take into consideration all of the things needed for a policy for economic growth to work properly. Not only do Japanese business and political leaders need to worry about issues within their borders. But they now feel the pinch of the European financial crisis along with many other developed nations.
The Euro Zone crisis has hurt countries all over the world because the EU is a huge market.
Unfortunately for Japan, it's physical limits and the destruction of industry by the earthquake and tsunami caused the cost of doing business with japan to increase.
Passing the extra costs on customers, consumers are less likely to purchase those products because of the uncertainty that surrounds the EU. I hope reconstruction projects in the spring will boost Japan's struggling economy.
I think that given the expansion Japan has seen in recent years, there shouldn't be too much worry regarding how hurt they will be by the current issues in the EU... If anything it should be a larger than normal speed bump in an otherwise illustrious future.
This is a great example of how a capitalist system is able to adjust to disasters and meets the needs of an economy. Firms are able to make an opportunity out of disasters as they meet the needs of the people which can spur economic growth and drive recover far beyond a government can plan for. This is a great strength of a capitalist economy.
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