Japan’s economy has been described as being neither dead nor alive for so long that its detractors could be missing positive signals. The first-quarter gain was 1 per cent ― twice the rate of the United States, which nobody would suggest is a failed economy.
If the full year brings 2 percent growth projected on the stimulus of the earthquake and tsunami rebuilding program, it will accentuate a positive trend of the past decade which has shown seven years of GDP gains since 2002. This will make Japan one of the best performing among the richest economies.
Critics may not have noticed the country quietly acted on price stability after the asset price collapse of a generation ago. It is also moving away from unproductive use of savings and state allocations. Its punishing yen rate is undoubtedly a serious matter, chiefly to exporters.
It caused the first trade deficit in three decades last year. But suggestions such as simply printing more yen to stimulate inflationary activity and check price declines sound pat. Pumping out money has not done the U.S. economy much good.
What has trapped Japan in an induced sense of mediocrity is distrust in the ability of any sitting government to effect change. Just now, blame that on the machinations of the Liberal Democratic opposition. The brickbats that Prime Minister Yoshihiko Noda has attracted for his economic revitalization plan are an example. He can be criticized for airily setting numerical goals ― five million jobs and annual growth of 2 percent through to 2020 ― but there is nothing pie-in-the-sky about his plans for green technologies and health care to encourage faster growth. Japanese financiers whom governments depend on to invest in new ventures should not be too quick to dismiss the plan.
There are synergies that Japan, with its engineering prowess, could exploit with China, which for its price edge and wide domestic use is the world leader in renewable energy products. As for expanding health-care services and medical research, nothing could be more appropriate for the world’s fastest aging society.
It is left to be seen how Japan proposes to bring down the yen’s value, unsustainable since the 1980s and which has risen by a third against the U.S. dollar since the banking panic of 2008. An overpriced yen has been responsible for the decline of Japanese manufacturing, with brands like Sony,
Panasonic and Toyota laid low. It is hard to predict whether consumer durables such as electronics and cars are passe for Japan’s economic future. But not many would dispute that environmentalism is the wave of the future or that people consume more personal-care services as they grow older.
(The Straits Times)
(Asia News Network)
