Wednesday
May272009
Japan's Incredible, Shrinking Economy
Wednesday, May 27, 2009 at 6:40PM
A brief post from the online edition of Business Week, last week makes note that Japan's gross domestic product (GDP) has been reported to have shrunk 15.2% within the first quarter of 2009. [BusinessWeek Online]
And to think, Japan Inc. spent nearly 15 years stumbling its way out of the Heisei Recession [Overview by Koichi Hamada] only to step into another, whopping economic downturn a few years later.
Currently, economic factors look pretty bleak for the country, despite the fact that the Business Week article makes note that this kind of bad economic news is usually back-dated and that good news could be around the corner, next quarter (gee, where have we heard that before?).
One thing worth noting however is the use of GDP as the measuring stick for Japan's collective, financial health. One thing I remember learning from the econ courses I took in Japan years ago was that measuring GDP as the ultimate test of economic well being was never really a great idea when applied to Japan.
The main reason for this is that Japan, while an international economic dynamo (even now), it's local economy has always lagged behind what the country did in the international market due to morose consumer demand.
With exception to a very brief, golden period in the late 1980s, Japan's domestic consumption has always been low when compare to other, equally well-to-do nations (such as the US).
I could go on and on about Japan's domestic consumption habits but to make it short and sweet, while measuring Japan's GDP gives you a fair estimate of the country's economic well being, its worth looking at Japan's gross national product (GNP) as it factors in GDP along with Japan's international dealings (foreign direct investment, overseas manufacturing, etc.).
Still, either way, things currently don't look too rosy for Japan - or anyone else for that matter.
[GDP vs GNP: Diffen.com]
And to think, Japan Inc. spent nearly 15 years stumbling its way out of the Heisei Recession [Overview by Koichi Hamada] only to step into another, whopping economic downturn a few years later.
Currently, economic factors look pretty bleak for the country, despite the fact that the Business Week article makes note that this kind of bad economic news is usually back-dated and that good news could be around the corner, next quarter (gee, where have we heard that before?).
One thing worth noting however is the use of GDP as the measuring stick for Japan's collective, financial health. One thing I remember learning from the econ courses I took in Japan years ago was that measuring GDP as the ultimate test of economic well being was never really a great idea when applied to Japan.
The main reason for this is that Japan, while an international economic dynamo (even now), it's local economy has always lagged behind what the country did in the international market due to morose consumer demand.
With exception to a very brief, golden period in the late 1980s, Japan's domestic consumption has always been low when compare to other, equally well-to-do nations (such as the US).
I could go on and on about Japan's domestic consumption habits but to make it short and sweet, while measuring Japan's GDP gives you a fair estimate of the country's economic well being, its worth looking at Japan's gross national product (GNP) as it factors in GDP along with Japan's international dealings (foreign direct investment, overseas manufacturing, etc.).
Still, either way, things currently don't look too rosy for Japan - or anyone else for that matter.
[GDP vs GNP: Diffen.com]
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