Japanese Economy Essay example -- essays papers

japanese preservation The Japanese economy is the second largest in the world, behind only the American economy. As such(prenominal), its decade long downward slide has many lessons the American economy can learn from. The difference between the economies is one of degree, not type. Our own economy has been faltering of late, bringing fear of recession. The Japanese start out been on that road for over ten years, and of late ask been devising aggressive moves towards a restructuring. This paper will look at the types of reforms plan in the Japanese economy, and more importantly if these reforms will be nice to pull a modern economy from the doldrums. The current state of the Japanese economy has much to do with a failure to adjust. In post-WWII Japan the countrys economy experienced a bubble economy. This era of racy growth is very similar to that which the American economy experienced after WWII. A booming population and a new focus on industry were mostly responsib le for the unprecedented growth in two countries. In the mid-1980s, Japans central bank reduced prime interest grade in response to what was then considered a moderate decrease. This dour wasnt sufficiency to give the economy a chance at sustained growth, as it wasnt combined with robust reform. Japanese banks took advantage of the low rates, and began taking on massive debt. The slowdown never truly stopped, though there were billet of greater growth. Though the economy grew by one percent on average, the combination of out of control debt and little population growth guide the economy down a path of ever slowing growth. today this debt, coupled with distrust of banks by depositors, has held back even the most hearty though out and well intentioned reform. Simply put, no restructuring can stretch out to real gains if the banks continue to fall behind on debt payments. In April, the unremarkably optimistic Central Bank of Japan issued a report downgrading its fancy fo r the Japanese economy, the third straight month it has done so. This was also the initial report since September 1995 that the admitted that the economy is in a state of deflation. Deflation is the lowering of prices, and leads to lower corporate profits across the board. Deflation has a crippling topic on an economy, and demands an immediate and strong response. The report attributed this most recent downswing to lower industria... ...k governor, Masaru Hayami, said growth has come to a standstill because of slowing exports.Worried about the stagnant economy, the Bank of Japan moved to compress interest rates to zero last month. It decided to keep such monetary policy unchanged at a meeting Friday.Exports have long been the driving force behind Japans economic growth. scarce the cool U.S. economy has dampened demand for Japanese exports.Japan unveiled an emergency mailboat earlier this month that set a two-year deadline for major banks to shut up of their riskiest bad loan s estimated at $104 billion.The non-performing loans -- a leftover from the collapse of Japans easy-lending conditions of the late eighties and early 1990s -- have crippled the nations economy.The April report pointed to five happen upon areas of the economy that remain troubled -- industrial output, corporate profitability, business sentiment, exercise and housing construction.Late last year, Japan set a get of 1.7 percent growth for fiscal 2001 through the end of next March. But some economists believe the forecast is too optimistic. For the fiscal year finish last month, the government has set a target of 1.2 percent growth.