Fall in demand in the US is driving the Japanese economy to contract faster than the US economy itself
Neither do they have a housing bubble, nor is their banking system saddled with that garbage called sub-prime. Yet, they are feeling the heat more than anyone else in the world. The extravagant adventures of the western cowboys have managed to thwart the languid Sumo economy once again, resulting into its fastest contraction since World War II, when the US ‘Small Boy’ and ‘Fat Man’ brought Japan to its knees. The Japanese economy has shrunk for the fourth consecutive quarter. To crown it all, with every quarter, the curve is going deeper and deeper into an abyss. The latest figures suggest an increased contraction of a mind-boggling 4% (15.2% anualised) in the first quarter as compared to 3.8% fall in the last quarter of the previous year. And it has all happened due to the recession in the US. Definitely, this makes for a great case study for global financial copulation where the woes of West have touched the Far East.
The reason is quite obvious – fall in exports. Over the years, Japan has transformed itself into an export-dependent economy and in such a case when exports register a mammoth 26% fall, then definitely there is no way it can dodge an economic slump. And that’s what is happening. As global trade is inching towards its biggest drop of 9% (10% for developed countries – WTO figures) since World War II owing to lack of demand and supporting credit lines, Japanese companies are forced to cut their production rampantly. This clearly gets reflected in fresh data released by the Ministry of Economy, Trade and Industry, Japan (for March 2009), which indicates a 34.2% (year-on-year) fall in industrial production and 32.4% in shipments. So much so that Japanese trade balance has now receded into the negative. Not only that, it has also resulted in withdrawal of expansion plans (capital expenditure has fallen by 10.4%), increased lay-offs and 1.1% fall in the household spending, one of the key indicators of a healthy economy.
Neither do they have a housing bubble, nor is their banking system saddled with that garbage called sub-prime. Yet, they are feeling the heat more than anyone else in the world. The extravagant adventures of the western cowboys have managed to thwart the languid Sumo economy once again, resulting into its fastest contraction since World War II, when the US ‘Small Boy’ and ‘Fat Man’ brought Japan to its knees. The Japanese economy has shrunk for the fourth consecutive quarter. To crown it all, with every quarter, the curve is going deeper and deeper into an abyss. The latest figures suggest an increased contraction of a mind-boggling 4% (15.2% anualised) in the first quarter as compared to 3.8% fall in the last quarter of the previous year. And it has all happened due to the recession in the US. Definitely, this makes for a great case study for global financial copulation where the woes of West have touched the Far East.
The reason is quite obvious – fall in exports. Over the years, Japan has transformed itself into an export-dependent economy and in such a case when exports register a mammoth 26% fall, then definitely there is no way it can dodge an economic slump. And that’s what is happening. As global trade is inching towards its biggest drop of 9% (10% for developed countries – WTO figures) since World War II owing to lack of demand and supporting credit lines, Japanese companies are forced to cut their production rampantly. This clearly gets reflected in fresh data released by the Ministry of Economy, Trade and Industry, Japan (for March 2009), which indicates a 34.2% (year-on-year) fall in industrial production and 32.4% in shipments. So much so that Japanese trade balance has now receded into the negative. Not only that, it has also resulted in withdrawal of expansion plans (capital expenditure has fallen by 10.4%), increased lay-offs and 1.1% fall in the household spending, one of the key indicators of a healthy economy.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)
