Will Japan's economy recover in 2012?
- By Wang Kai
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People's Daily, January 6, 2012
With the arrival of 2012, shadow of the devastating earthquake that hit Japan in March 2011 and the ensuing Fukushima Daiichi nuclear disaster still hangs over the Japanese economy.
Japan's economy worsening
The New Year has come, but Japan's economy remains plagued by the earthquake and nuclear disaster occurring in March. The economy has again shown weakness, according to recent statistics from the Japanese government.
According to economic data released on Dec. 28, industrial production in the country declined nearly 3 percent in November from the previous month, following a month-on-month decline in October.
The country’s average household spending dropped more than 3 percent in November from last year, and total retail sales dropped more than 2 percent from last year, showing poorer performance than previously predicted.
Meanwhile, the Consumer Price Index (CPI) dropped 0.2 percent from a year earlier, and the core CPI dropped 0.5 percent from the previous month which is its second straight monthly decline.
Japan's central bank recently lowered its assessment of the Japanese economy from "the economy is taking off" to "the economic recovery is slowing down" at a board meeting on financial policy.
According to a questionnaire survey of 100 Japanese business owners conducted by Nikkei Inc, one of the largest media corporations in the country, nearly 50 percent of respondents believe that global economic conditions are worsening, and more than 70 percent believe that the Japanese economy is at a standstill.
Will it have a gradual recovery?
In 2012, the European sovereign debt crisis is likely to deteriorate, and the world economy will remain sluggish. As a safe haven, the yen is bound to witness further appreciation. Overall, Japan's economic outlook for the coming year is bleak.
However, not all people believe that Japan's economy will be unpromising in 2012. Japans’ central bank believes that although its economy will level off in a short term, it will benefit from the demands from emerging countries' economic development and its own post-disaster reconstruction and it will return to the road of recovery in the long run.
The Japanese government passed four supplementary budgets in 2011 and invested 18.5 trillion yen in total in the post-disaster recovery and reconstruction. The first three supplementary budgets contributed 2.6 percentage points to the GDP growth, and the fourth contributed 0.3 percentage points. Experts believe the effect of these supplementary budgets will show in 2012.
The Japanese government has taken a series of measures to revive Japan's gloomy economic situation, but it is hard to tell whether Japan's economy will recover in 2012.
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