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The Relationships Among Real Gdp Growth Rate, Unemployment Rate and Consumer Price Index of Japan Between 1999 and 2009

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The Relationships Among Real Gdp Growth Rate, Unemployment Rate and Consumer Price Index of Japan Between 1999 and 2009
IB Economics

Economics Task 11

Block G| Louis Cheng

Louis Cheng

The relationships among real GDP growth rate, unemployment rate and consumer price index of Japan between 1999 and 2009
In this essay, we will be looking at Japan’s economy through the 3 macro-economic indicators. The economy of Japan is the second largest in the world in terms of nominal GDP, after the US. Economic growth in Japan, however, has been slow in the recent decade: throughout the 1990s her growth was slower than growth in other major industrial nations, from 4.5% per annum in the 1980s, real GDP rose just 1.5% p.a. in the 1990s and 0.8% p.a. in the 2000s. We will investigate the relationships among the 3 indicators in Japan, through which we look at a kind of deflation unique to Japan. The real GDP growth rate measures the increase in value of all final goods and services produced within a nation in a given year - taking into account of inflation(or deflation) but not purchasing power parity. Real GDP growth rate of a certain year can be calculated from the formula (GDP of current year - GDP of previous year) ÷ GDP of previous year × 100% Below shows the trend graph of real GDP growth rate of Japan in the past 10 years:

The relationships among real GDP growth rate, unemployment rate and inflation rate of Japan between 1999 and 2009

1

Louis Cheng

Real GDP growth rate of Japan in the past 10 years 3.50 1.75 0 Percentage -1.75 -3.50 -5.25 -7.00

1999

2000

2001

2002

2003

2004 Year

2005

2006

2007

2008

2009

The Japan’s real GDP growth rate is rather low, not exceeding 3.5% growth rate in any of the years; in 2008 and 2009 it falls below zero, influence by the global financial crisis, indicating Japan’s total value of final goods and services is decreasing. Moving on, the unemployment rate is the percentage of the total labor force that the unemployed population occupies, with the formula no. of unemployed ÷ (no. of employed + no. of


References: Data for real GDP growth rate, unemployment rate and consumer price index of Japan in the past ten years. International Monetary Fund: http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx? sy=1995&ey=2009&scsm=1&ssd=1&sort=subject&ds=.&br=1&pr1.x=31&pr1.y=6&c=158&s=NGD P_R%2CNGDP_RPCH%2CNGDP%2CNGDPD%2CNGDP_D%2CNGDPRPC%2CNGDPPC %2CNGDPDPC%2CNID_NGDP%2CPCPI%2CPCPIPCH%2CLUR%2CLE%2CLP%2CBCA %2CBCA_NGDPD&grp=0&a= Data for unemployment rates of the USA, UK, Australia in the past ten years. International Monetary Fund: http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx?sy=1999&ey=2009&scs m=1&ssd=1&sort=country&ds=.&br=1&pr1.x=31&pr1.y=5&c=193%2C532%2C112%2C111&s=L UR&grp=0&a=#download Other information Wikipedia: http://en.wikipedia.org/wiki/Economy_of_japan The relationships among real GDP growth rate, unemployment rate and inflation rate of Japan between 1999 and 2009 8
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