Is the Japanese economy really emerging from its “lost 30 years”?
The Japanese economy has been showing unusual movements recently. Attempts to escape the deflationary trap that has lasted for over 30 years are being detected in various places. In July 2024, the yen’s value fell to 161 yen per dollar, hitting a 37-year and 5month low. Ironically, however, the NIKK 225 and topics indices have reached their highest levels in about 30 years, and the stock market is booming. What do these two conflicting indicators mean? Is the Japanese economy really preparing for a new leap forward, breaking away from its long-term stagnation? The Japanese economy still holds an important position in the global economy. According to the International Monetary Funds forecast for 2025, Japan’s nominal GDP is expected to reach $4.19 trillion and its GDP based on purchasing power parody is expected to reach $6.74 trillion. The service industry accounts for about 70% of GDP leading the economy with manufacturing providing strong support. In particular, the automotive industry is a key driver of the Japanese economy with Toyota firmly maintaining its position as the world’s largest automobile manufacturer. However, there are also evaluations that the manufacturing sector has been losing its past status since the 1990s. Recently, the Japanese economy has taken an important step towards escaping deflation by achieving a 2% inflation target. The Bank of Japan is actively utilizing quantitative easing and negative interest rate policies to achieve this. But this has also resulted in the inevitable side effect of a weak yen. As of 2024, Japan’s exports amounted to $691 billion with major export items including transportation equipment, machinery, electrical machinery, and chemical products. Major export destinations include China, the United States, ASEAN, and the European Union, confirming the influence of the Japanese economy in the global market. However, it is important to note that Japan’s public debt was about 260% of GDP as of 2021, which is a very high level among developed countries.
#Japaneseeconomy #Deflation #Keiretsu #Automotiveindustry #Aging
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○ Sources
1. Wikipedia: https://en.wikipedia.org/wiki/Economy_of_Japan
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