TOKYO (majirox news) — Japan shows no signs of emerging from its recession, according to Hiromichi Shirakawa, chief economist of Credit Suisse in Japan. However, the government is attempting to make substantial steps to reverse the trend. Experts list high government debt, aging population and ongoing deflation for Japan’s problems.
“The government has been taking more serious steps trying to reverse the currency markets and try to weaken the yen,” Shirakawa said. “The BOJ, the Central Bank, is printing money more aggressively.”
However, it seems that the yen will continue to be strong, with the Americans and the Europeans also flooding their markets with new money.
“If the yen remains strong, Japan’s deflation is unlikely to come to an end,” Shirakawa said.
Another problem is the aging population, which will bring a decrease in technological innovation, consumer demand and manufacturing facilities. But there are solutions.
“One way to do this is probably to deregulate or open the labor market and try to increase immigrants from Asia and try to stimulate the services economy,” Shirakawa said. “Let’s say like medical or agricultural businesses.”
Joseph Nixon, CEO of the State Bank of India, says on the plus side, a strong yen allows ordinary Japanese to enjoy imported goods at lower prices and for Japanese companies to make overseas investments. But this has to happen quickly.
“Japan should act fast like Korea, Japan should take decisions, very fast and penetrate the economies like India where are a lot of opportunities for the Japanese to get high returns on their investments.”
For the ordinary Japanese public, though, it’s a question of tightening your belt, and toughing it out.
An employee of Japan Railways in Tokyo, says, “I have to look out for myself. For example, I reduce alcohol and cigarettes and eating out. In this way, I’m protecting myself from the current economic situation.”
Japan has problems, but they’re not going to cause the country to collapse overnight. However, Russell Jones, Global head of Fix Income Strategy at Australia’s Westpac Institutional Bank, told moneycontrol.com that there’s the possibility when an economy like Japan also has a high level of government debt, about 220 percent of GDP, all the factors are coming together for some sort of crisis.