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Since the Fukushima nuclear disaster triggered by the giant tsunami that hit Japan in 2011, the country has gone through a difficult transition as a developed country and as one of the global economic leaders. As of 2012, Japan had the third highest GDP in the world but placed as the top nation with the greatest deficit in its national budget. Several primary factors have brought about the present economic challenges of Japan in relation to the global market which used to be its primary source of its wealth, if not its virtual playground, from the 1960’s to the 1980’s. Here are the reasons for its economic woes at present.
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Elliott & Associates Research Global Markets Japan Global Markets: The challenges of the Japanese economy
Elliott & Associates Research Global Markets Since the Fukushima nuclear disaster triggered by the giant tsunami that hit Japan in 2011, the country has gone through a difficult transition as a developed country and as one of the global economic leaders. As of 2012, Japan had the third highest GDP in the world but placed as the top nation with the greatest deficit in its national budget. Several primary factors have brought about the present economic challenges of Japan in relation to the global market which used to be its primary source of its wealth, if not its virtual playground, from the 1960’s to the 1980’s. Here are the reasons for its economic woes at present. Please visit us at elliottassociatesresearch.com/
Elliott & Associates Research Global Markets 1. Decrease in consumer confidence Almost every country that experiences a calamity suddenly undergoes a period of depression, both economic-wise and socially. That is an obvious result to such devastating causes that can disrupt the natural, political and social environment, as well the human infrastructure needed for the delivery of essential public and private services. 2. Unbalanced Demographics Japan, not unlike many developed and developing countries such as Singapore, Sweden and others, has a shrinking population with a big part of which is made up of aging citizens. On the average, Japan has a ratio of two workers for each retiree, a rather large and unsustainable ratio compared to its previous more productive years.
Elliott & Associates Research Global Markets 3. Energy Insecurity Ever since the Fukushima event, the use of nuclear energy to provide power for industrial and general use has greatly diminished. Energy shortage and power costs have battered the Japanese economy as if it were a daily tsunami hitting its shores and wreaking havoc over its traditional role as a powerful economic and trade force in Asia as well as in the entire globe. Previously providing one-third of its energy requirements, nuclear energy has almost lost out totally to other power sources (coal or gas) which have to be imported; thus, aggravating the economic landscape that is already bleak as it is.
Elliott & Associates Research Global Markets 4. Lack of Confidence in Political Leadership Until Prime Minister Abe came out with policies to revive the Japanese economy, the post-Fukushima scenario was a period of gloomy outlook for the nation’s economy. Inviting local and foreign investors to rejuvenate the dwindling economy in the face of natural and global economic causes has somehow given new impetus for people to spend more aggressively than before. The renewed confidence might just be the signal for Japan’s recovery in spite of the existing challenges. However, implementation of new policies and economic thrusts sensitive to the realities of the present will determine how the nation will fare into the near future.
Elliott & Associates Research Global Markets 5. Establishing Productive Trade Relations One factor that observers have felt must be addressed is the repositioning of Japan as a more active trade partner with growing economies in Asia as well as those in the trans-Pacific Region. The road ahead is not very clear; however, like most nations in general, the prospects of growth are rife. It could be the right direction that Japan needs to reinvigorate its economy and reclaim its position as a leader in global trading. Reference: “How can Japan compete in a changing global market?”, A round table report, Clara Gillispie.
