Japan Economy At A GlanceCountry Focus
Among other countries in Asia, Japan economic show its promising future from year to year, especially after having achieved remarkable growth in the second half of the 20th Century after the devastation of the Second World War. From the nominal GDP released earlier this year, Japan economy is considered to be the third-largest in the world and the fourth-largest by purchasing power parity, making it the world’s second largest developed economy.
According to the 2016 Index of Economic Freedom that was released by The Heritage Foundation, the Japanese economy benefits from political and social stability and efficiently run institutions. The rule of law is firmly respected and supported by an effective judicial framework and a relatively low level of perceived corruption. Although the country has a population of about 127 million, the unemployment rate in Japan is arguably low, only about 3.7 percent, meaning the social welfare in Japan is fairly good.
On the other hand, analysts see that there are a few problems in the Japan’s economy today. As reported by Focus Economics, although the Japanese economy managed to expand for the second consecutive quarter in Q2 but its economic dynamics were negatively affected by a number of factors including weaker wage growth and a rising yen.
In an attempt to jumpstart growth, Prime Minister Shinzo Abe’s cabinet approved JPY 28.0 trillion (USD 265 billion) in stimulus measures on 2 August—only JPY 7.5 trillion will be new spending—, while the Bank of Japan (BOJ) timidly expanded its monetary easing program in July. Nevertheless, Japan’s challenging economic outlook is adding pressure on the authorities to take further action in order to shore up the economy. This Abe’s rescue plan known as the Abenomics, has helped to weaken the yen and boost corporate profits but wages and domestic spending have remained fragile.
To address this issue, the Bank of Japan assures that they will keep taking whatever action is needed to meet its targets and Abe has pledged “bold” measures this fall. This determination is also supported by the country’s economists who agreed that dramatic strategies are needed in order to overcome all the problems the country is facing at the moment.
Sources: www.heritage.org, www.focus-economics.com, www.bloomberg.com