Published By: Hessa Meshar
29 November 2016
Japan is known for its large economy ranking the third in the world for its nominal GDP and the fourth largest PPP, making it the second largest developed country in the world. Although, that doesn’t mean that their economy is doing great all the time.
During the last quarter in 2009, Japan faced a huge GDP crisis where it’s GDP fell at a rate of 4% which was the steepest fall for the country. Japan’s GDP drop was recorded as the greatest drop in the world’s leading countries at that time. The country’s economy was mainly affected by their net export and import. The fall resulted when Japanese export fell 26%, while their import went down by 15%. The recession reflected cuts in jobs and domestic spending, factories closing down and fewer government spending. Japan’s biggest manufacturing companies lost around $3 billion to $8 billion in the fiscal year which was recorded as the largest loss ever.
A New Path to Success
After the severe recession, Japan’s GDP finally recovered with the help of China and the rest of Asia by exporting goods and increasing the capital spending by the nation’s manufacturers. Other than the quality problems at Toyota Motor Corporation and the bankruptcy of Japan Airlines Corporation, the profit of most Japanese companies flourished at the end of 2009, and Japan’s economy is growing faster at a rate of 4%. Policy makers and economists are being optimistic about Japan’s near-term prospects. The data shows that Japan’s economy may remain at a sustain growth. The central bank’s target interest rate is at 0.1%; which will also help the market and increase the demand. Government Monday announced that Japan’s annualized growth rate was 4.6% for the fourth quarter which is a good indicator that the economy is improving.
What About Today?
Japan’s economic growth surpasses expectations in the third quarter 2016, helped by the expanding exports. The government issued that Japan’s export-reliant economy is undergoing a recovery after Republican Donald Trump’s shocking victory in the U.S. presidential elections. Although his victory made the globe’s economists uncertain about the global economic outlook, his victory had a positive impact on Japan’s economy. Yen fell to eight-month lows against the dollar, but a weaker yen is a great news for Japanese exporters. The economy expanded by 2.2% and external demand added 0.5% to the GDP.
In the fourth quarter of 2016, Japan’s economy revised a 1.7% contraction which was worse than the previous one estimated to 1.1% drop. This resulted when the companies were reluctant to utilize their stockpiles of cash presented by the decline in capital spending. Fortunately, Japan’s economy dodged the recession as government and consumers spending increased. Investments fell 1.4% in the first quarter and consumption rose 0.5%, but all in all nominal GDP rose 2.2%. Nominal GDP showed fall in consumption, investments, and capital spending but an increase in government spending.