22096314 economy analysis japan

8/2/2019 22096314 Economy Analysis Japan

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Economy of Japan

Economic Maturity & Slowdown

YEN

OIL

TRADE


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Japanese post-war economicmiracle


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Why Japanese economy?

2nd larg

estecono

myinwor

ld

10thinpopulation

2ndlargestimporte

rofnaturalresour

ceslike

coal,oil&liquefied

naturalgas

Japan

Airlin

esco

untin

gasone

ofthe

large

st

compan

iesin

thew

orld.

Japanishometo326comp

aniesfromthe

ForbesGlobal2000

world

'shig

hestlev

elsof

cropy

ields

peru

nitarea

Ran

ked2n

dintonnageo

ffishing

Industrial Production Growth Rate: 3.3%
http://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Japan_Airlineshttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Japan_Airlines


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Agriculture-------------

Only 12% of Japan's land is suitable for cultivation.

rice, sugar beets, vegetables,fruit, pork, poultry, dairyproducts, eggs, fish

Imports- large quantities of wheat, sorghum, and

soybeans, primarily from the United States

Manufacturing Services

Japan is home to six out of top 10 largest

vehicle manufacturers in the world.

Toyota,Honda,Nizzan,Suzuki,Yamaha

&Mazda

Japan's service sector accounts forabout three-quarters of its total

economic output.


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Other economic indicators Industrial Production Growth Rate: 3.3% (2006 est.)

Investment (gross fixed): 100% of GDP (2006 est.)

Electricity: Electricity - consumption: 946.3 billion kWh (2008)

Electricity - production: 996 billion kWh (2008)Electricity - exports: 0 kWh (2006)Electricity - imports: 0 kWh (2006)

Oil:production: 125,000 bbl/day (2006)consumption: 5.578 million bbl/day (2005)exports: 93,360 barrel/day (2005)imports: 5.449 million barrel/day (2005)

net imports: 5.3 million barrel/day (2005 est.)


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Japanese economy overviewStatistics

GDP (PPP) $4.28 trillion (2007 est.)

GDP growth 2.8% (2006 est.)

GDP per capita (realGDP)

$38,500 (2006 est.)

GDP by sector agriculture: (1.6%) industry: (25.3%) services: (73.1%) (2006 est.)

Inflation 0.3% (2006 est.)

Population belowpoverty line

13.5% (after taxes and transfers) [1]

Labour force 66.44 million (2006 est.)

Labour force byoccupation

agriculture (4.6%), industry (27.8%), services (67.7%) (2004)

Unemployment 4.1% (2006 est.)

Main industries motor vehicles, industrial and transportation equipment, electronics, chemicals, steel,machine tools, processed foods, nonferrous metals


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Economy overview contdTrading Partners

Exports $678.1 billion FOB (2007 est.)

Main partners U.S. 20.4%, China 15.3%, South Korea 7.6%, Taiwan 6.3%, Hong Kong5.4% (2007)

Imports $573.3 billion FOB (2007 est.)

Main Partners China 20.5%, U.S. 11.6%, Saudi Arabia 5.7%, UAE 5.2%, Australia 5%,South Korea 4.4%, Indonesia 4.2% (2007)

Public finances

Public debt 176.2% of GDP, including domestic debts. (2006)

External debt $1.547 trillion (30 June 2006)

Revenues $1.411 trillion (2006)

Expenses $1.639 trillion, including capital expenditures (public works only) of about$71 billion (2006 est.)

Economic aid $9.7 billion ODA (February 2007)


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-4%

-2%0%

2%

4%

6%

8%10%

12%

14%

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

High growth period

Stable growth period No growth period

Real GDP Growth

1st Oil Shock

2nd Oil ShockYen floats

Bubble collapses


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Macro-economic trend

2007-> 2.08% 2008-> -0.6%


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Macro-economic trend


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Trend of gross domestic productYear Gross Domestic

Product

US Dollar Exchange Per Capita Income

(as % of USA)

1955 8,369,500 360.00 10.31

1960 16,009,700 360.00 16.22

1965 32,866,000 360.00 24.95

1970 73,344,900 360.00 38.56

1975 148,327,100 297.26 59

1980 240,707,315

225.82 74.04

1985 323,541,300 236.79 63.44

1990 440,124,900 144.15 105.82

1995 493,271,700 122.78 151.55

2000 501,068,100 107.73 105.85


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Delayed Systemic Reform?

After catch-up industrialization, Japan shouldhave changed its system in the 1970s

However, large macro shocks (oil shocks,floating, stagflation, trade disputes) diverted

policy makers attention from structuralissues.

As a result, the Japanese economy continuesto be over-re ulated even toda .

Long-term relations

Official intervention

Open markets

Private initiative


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The Cause of 1970s Stagflation

Supply shock view

OPECs oil price hike was the maincause. Aggressive wage hikes alsocontributed.

Expansionary fiscal & monetary policyaccommodated and softened the blow.

Global monetarist view

As US lost monetary discipline, the fixedrate regime collapsed in 1971-73 and

USD fell. Major central banks expanded money to

counter appreciation pressure, causingglobal liquidity glut in the early 1970s.

Oil shock was the result, not the cause, oflobal inflation.

AS

AD

P

Y

0

2

4

6

8

10

12

14

1960

1962

1964

1966

1968

1970

1972

1974

World Money Growth

Source: McKinnon (1979), p.264


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Productivity Change by Industry (%/ year)

-4

-2

0

2

4

6

8

10

12

Food

Tex

tiles

Woo

dpro

ducts

Paperan

dpulp

Chem

icals

Oilan

dgas

Ceram

icse

tc.

Ironan

dstee

l

Non

ferrousme

tals

Me

talpro

ducts

Genera

lmac

hinery

E

lec

tricalmac

hinery

Transportmac

hinery

P

rec

isionmac

hinery

1954-73

1974-90

McKinnon-Ohno (1997) chap.2

Productivity Slowdown


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Interest rate


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Unchanged interest rate

The central banks decision to leave interestrates unchanged since early 2007

Given slower output growth, increaseduncertainty about the economic outlook andcontinued deflation.

The Bank of Japan has appropriately kept itsshort-term policy interest rate unchanged at per cent since February 2007


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New monetary policy framework

Central bank-> sets the policy interest rate toachieve a path of sustainable growth under pricestability.

Bank of Japans Policy Board->0 to 2% is itsunderstanding of price stability in the medium tolong term, the first time that it has specified an

inflation range.

As a course of monetary policy, which willinfluence the pace of economic growth and the

evolution of inflation.


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Economy 2009 Japan's economics minister says, "no confidence at all" that the

world's second largest economy will grow this year(2009)-Financial express(Tokyo).

Although Japan has not suffered financial turmoil on the same scaleas the United States or Europe, its trade-dependent economyremains vulnerable to the global downturn.

Result->economy contracted 0.1 per cent in the third quarter aftershrinking 0.9 per cent in the second, entering its first recession inseven years, the government reported


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Economy 2009_snipetsJapans

newcarbontargetRet

hinking

oflifetimee

mploym

ent

DeflationW

oe

Capital

spendingf

alls21.

7%

New government

Budgetrecord-92tril.yen

Industrialgrowthup1.9%Job

lessrate

risesto5.7

%

Gdpfa

llto-5.8%


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22096314 economy analysis japan

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