22096314 Economy Analysis Japan
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Transcript of 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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