The Japanese economy seems to be in a state of constant recession for last two decades. All attempts by the government to stimulate the economy have failed. There was an asset bubble which burst in the late eighties and it led to accumulation of toxic assets in the books of many Japanese banks. The Japanese government was slow to react to the crisis as there was reluctance on the part of the government to accept the gravity of the situation . The initial response was to sweep it under the carpet . However, what followed was something unparalleled in economic history of the post world -war world.
The economic problems have been compounded as a result of deteriorating demographic profile of the country. The population of Japan has been declining since 2006. The burden of ageing population has placed heavy burden on state finances.
The interest rates in Japan are close to 0 % and even such monetary tools have failed to stimulate the economy. Japan needs to do a serious thinking about its future if it wants to preserve its status as a world economic giant. Otherwise, this great nation of hard working people will get relegated to the list 2nd tier countries.
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