Impact Of Economic Growth On The Economy Of Japan

Economics growth is, it the short run an increase in real GDP and in the long run an increase in the productive capacity of an economy (the maximum output that the economy can produce). GDP stands for Gross Domestic Product which is the country’s production of goods and services valued at market price in a given time period. Real GDP is when these figures are corrected for inflation using a base year (The UK uses 2003 as its base year). It can be measured in three different ways; the output measure is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. The

The U.S. has reached the even level of inflation—not too hot and not too cold. The Japanese have endured a decade of near zero inflation ,and as of 2004, a outright deflation. However, the Japanese economy shows signs of climbing out of its funk based on it strong GDP showing.

By contrast, Greece’s public debt is valued at about 130 percent of it's GDP at the beginning of it's present default misfortunes. While Japan may well be able to service this substantial debt without the risk of sovereign default, making the assumption that it's low-interest-rate climate is maintained, it's difficult to see how conditions for fast or even moderate economic growth could be generated with these circumstances

Japan’s unemployment rate of about 4% opposed to the U.S. unemployment rate of close to 10%. Even the financial debt to GDP ration is an advantage, and debt in the private sector has not increased unlike the U.S. and European countries, (Time, 2009). In addition, since Japan is a huge exporter and with the U.S. demand going downward, the international balances and growth declined especially as the dollar value dropped and the yen surged. •

The graph of economic growth look so nice and strong. People were being very optimistic about the economy, making Japan in the emotion of euphoria, which started a trend of investing.

The growth advanced Japan to rank as the 2nd largest economy in the world rivaling the United States. However, this economic growth started slowing in the 1970s and in 1990 real estate and stock prices crashed and “the bubble burst” (Drogus and Orvis 240). Luckily, the government managed to get the economy back up and running in 2003 when Prime Minister Junichiro Koizumi reduced regulation, privatized the postal service saving system, and lowered deficit spending.

The statistics show that the growth of the economy in Japan comes out very good, but it is a

The United States is the world's largest deficit and debtor country and with Japan being the world's largest surplus and creditor country, are economies depend on having continues affairs through trade, capital flows and this plays a critical role in the world economy as well as a central role in overall relations between the two countries. Both are large industrialized and have provided their residents with an efficient standard of living. The U.S. economy is almost (2 ½) times larger than that of Japan’s compared both on a nominal and purchasing power parity (PPP) basis. See graph below for (1991-2014) GDP (USD) to compare with (2001- 2014)

In 1945, Japan was devastated and lost a quarter of the national wealth after suffering a defect in the second world war. A majority of the commercial buildings and accommodation had been demolished, and massive machinery and equipment formerly used in production for the civil market were out of service to provide metal for military supplies (Miyazaki 1967). Despite the trash and ruins had left over in Japan, Japan was able to rebuilding its infrastructure and reconstruct their economy. It is revealed that the Japanese economy was on its way to recovery, which received a rapid development since the war, and the reconstruction of Japan had spent less than forty years to become the world’s second largest economy in the 1980s. This essay will explore the three factors account for the economic growth of post-war Japan: the financial assistance from the United States, the external environment, and the effective policy of Japanese government.

Japan has been involved in currency manipulation from the early 2000. From 2000 to 2014, Japan 's holdings of foreign exchange reserves increased from $347 billion to $1208 billion, a quadrupled gain of $861 billion. The holdings of foreign assets in Japan 's GPIF also increased to $308.8 billion in 2013, and project to increase to $480 billion in the future (Bergsten 2014). Japan 's trade balance and current account remain suppressed in 2013 due to several factors, such as earthquake and tsunami, which increased demand for imports in anticipation of value-added tax increases that took effect in 2015. This also led to short-run impact of the fall of yen, which increased cost of Japan 's imports. In the upcoming years, the devaluation of yen is expected

The deregulation of financial markets catalysed by Globalisation worldwide has impacted on the amount of trade within the Japanese economy beneficially allowing easier access to foreign currencies, facilitating a higher flow of goods between nation, by relaxing laws that severely prevented foreign buying of currency, and floating the yen. These drivers have helped boost Japan's trade and recovery from its recession. Technology has allowed finances to be traded and communication to be near to instantaneous. This has increased dramatically the amount of FDI into Japan largely thanks to the numerous strategies the Japanese government has taken to promote economic growth and hence development. Finance and Foreign Direct Investment (FDI) have increased as a direct result of globalisation doubling from $63 billion in 2001 to $144 billion in

The Japanese banking industry has recovered well from the 2009 crisis to consistently post moderate growth. This trend is forecast to continue through to 2017. Japan is the second largest banking industry in Asia - Pacific, accounting for over 26% of the region’s total assets. The Japanese banking industry had total assets of $11,065.8bn in 2012, representing a compound annual growth rate (CAGR) of 2.1% between 2008 and 2012. (MarketLine, 2013)

As a result, Japan went into a prolonged period of deflation that lasted for most of the 1990’s. In order to boost demand, the Japanese government took a Keynesian approach and went through 10 fiscal stimulus packages in 1990’s totaling over 100 trillion yen (10). However, this didn’t have the desired effect on demand because of deflation. Consumers were putting-off purchase decisions because prices were falling. The real GDP stagnated and average growth between 1990 and 2001 was only 0.37% (12).

Japan ranks as the third largest economy in the world as of 2010. The GDP at current prices in US dollars in Japan was reported at 5068.06 billion in 2009, according to the International Monetary Fund (IMF). Japan’s resurgence after World War II has however reached an inflection point in yearly 1989 after the burst of Japan’s asset price and real estate bubbles. As can be seen from the graph below, Japan’s GDP has hovered around the same level through more than 20 years of economic stagnation. The GDP’s slow growth has been exacerbated by the world financial crisis of 2008. A major landmark of Japan’s stagnation has been the BOJ’s fight against deflation.

While Japan’s economy may be contracting, the unemployment rate has lowered to 3.1 percent in October which came down from the 3.4 percent that is was at in January of 2015. The lowest value since July of 1995, but as the number of unemployment has declined sharply and employment has rose. The average of unemployment was 2.7 which was set in 1953. The unemployment rate for Japan is reported by the Minister of Internal Affairs and Communication.