Japan's economy in bad shape?

Ateneo Professor on Entrepreneurship

Repost from About.com | August 28, 2013

 


Despite our impression that the Japan's economic juggernaut is still on the move (what with the Toyota, Mitsubishi, National, Fuji, Nissan, JVC and more dominating their markets) Japan's economy is in bad shape even before the the 2011 tsunami disaster and Fukushima nuclear power plant problems, economic problems have hobbled Japan since 2008. I got a hint of this when IMF chief in a BBC interview said that Japan is a challenge to them.

I used to admire and absorb all things that are Japanese - management, manufacturing methods, quality etc.

Japan's debt to GDP ratio is 182% (nearly twice) which more than the US.  Unlike US which has dealt agressively with its economic woes (like the QE), Japan is not.

Some economic data on Japan:

1.  Japan's economy shrank .11% in 2011 due to decline in manufacturing output due to lesser electricity generation due to Fukushima problem;

2.  The bank of Japan bought US bonds heavily to make yen competitive, hence the high debt to GDP ratio;

3.  Japan just emerged from a 20 year period of deflation and recession;

4. It has aging population;

5. It is challenged by rising commodity prices:  it has to import much of its food and fuel resources;

Above all, Japan is behind now in entrepreneurship.

Japan as the 4th largest world economy is important to rest of Asian countries as it provides many jobs.  It establishes plants and supply chain for its manufacturing sector for the car and electronics.  And there is the competition from China.

Do you agree with the statement that Japan's economy (and finances) is in trouble?

What could the Japanese government do to reverse the situation?

Is entrepreneurship really a problem in Japan?

So Japayukis and those working for Japanese companies, this not the time to be complacent.  Japan's economy is not so sound as we think it is