Japan, often called the land of rising sun, is struggling to see light
in its economic matters. Japan's economy has been
shrinking incredibly since the onset of the global
financial crisis. It is incredible because Japan, which had consistently experienced
a surplus in its current account since 1981, posted a current account
deficit of 172.8 bn yen ($1.76 bn) in January 2009. In the six months to January,
it recorded an annualized trade deficit of 4 tn yen ($39 bn), compared to a
surplus of almost 11 tn yen a year earlier. This reversal of trend is mainly due
to its faltering exports. Japanese exports declined by 49.4%—the steepest
slide since 1957—in February 2009 as well, which underscores the severe impact
of the global slowdown on global demand for Japanese products ranging
from cars to heavy machinery and
electronics.
Economists opine that Japanese exporters are hurt by a triple
whammy of shrinking overseas demand for their products, a persistently strong
yen that makes their goods expensive at a time when demand is slowing, and
the fact that Japanese dominate in products— at the high-end of the
market—that are feeling the brunt of the
global slowdown. The ongoing developments are pushing the world's second
largest economy into a deep recession. Japan's economy contracted by an
annualized 12.1% in the last three months of 2008, its worst performance in 35 years,
and the biggest contraction among developed countries. Its industrial
production plunged by 38% by February this year. Economists view that 2009 is
not going to be much different and expect its GDP to shrink by 6.6%, wiping
out all the gains garnered in the last
decade. |
