Japan is one of Asia's countries that has been able to maintain a positive economic growth rate in 2008. But like in any other country in world, Japan's economy has also been affected by global economic meltdown. In 2009, Japanese economic growth is expected to dip further in comparison to 2008.
Japan economic growth (2008)
As per a report released by Organization for Economic Co-operation and Development (OECD) in April 2008, economic growth in Japan was expected to be around 1.6 percent in 2008. This report also identified certain areas of concern for Japan economy. Deflation, income inequality, and growth in public debts were citied as major challenges to overcome for Japanese government. OECD report also advised Bank of England against raising interest rates, till inflation rate was brought under control.
International Monetary Fund (IMF) also released a report in July 2008, which indicated that though Japanese economy would experience a slowdown, it would still manage to avoid recessionary pressures. This IMF report estimated GDP growth of Japan to remain around 1.5 percent in 2008-09. A growth prediction of 1.5 percent indicate that IMF expects weaker business investment and private consumption for Japan.
Japan economic growth: Areas for improvement
There are several challenges that Japan's government has to meet, so that a decent growth rate could be maintained in 2009. Deflation being a recurring problem, needs to be addressed through new monetary policies. Government revenues need to be increased by introducing tax reforms, without compromising on economic growth. Tax reforms should also address income inequality issues.
Coping with global economic slowdown
To counter global economic slowdown and reduce its impact on Japan economic growth, fiscal policy should focus on solving medium-term concerns. Effort should be increased to improve financial sector of Japan. Fiscal policy needs to work towards reduction of public debt, and accommodate spending for aging-related matters.
|