Japan’s Economic Malaise
Japan’s Economic Malaise An affluent economy has the dynamics to identify their financial strength and prosperity by the principles they practice and execute. However, when a country becomes overly confident on their abilities to remain consistent as a global power they become vulnerable to complacency. A nation’s economic wealth becomes susceptible when they no longer recognize the potential risks that may lead their country to either a recession or total collapse of their economy. Japan’s economic malaise clearly articulates how the country’s failure to recognize the strategies they set for their nation would lead to one of the biggest economic catastrophes in the world.
Japanese Economy Stagnated Beginning in the early 1980’s up to 1989, Japan’s economy had grew at a record pace. The Nikkei stock market was up over 600 percent and property prices reached levels never seen before. Society was recognizing a wealthy standard of living that boasted the world’s second largest economy. By early 1989, Japan would experience an improbable market crash that would eventually devastate their hope for continued success. In addition, property prices began to drop significantly in response to the stock market’s immediate downfall. The simultaneous reaction of Japan’s stock market and property prices led to deflationary issues throughout the country.
Deflation occurs when there is a continuous fall in prices. The fall in prices become the beginning of a greater issue. Consumers and businesses begin losing confidence in the economy by trying to minimize the amount of cash they spend and begin saving more to survive. Optimism levels drop dramatically causing a pattern of ambiguity on whether their country has the ability to recover. While Japan was beginning to endure their setbacks, banks began to eliminate lending as property prices began a downward spiral. Debt rose to extreme levels and many businesses started to notice their financials were diminishing
Japanese Economy Stagnated Beginning in the early 1980’s up to 1989, Japan’s economy had grew at a record pace. The Nikkei stock market was up over 600 percent and property prices reached levels never seen before. Society was recognizing a wealthy standard of living that boasted the world’s second largest economy. By early 1989, Japan would experience an improbable market crash that would eventually devastate their hope for continued success. In addition, property prices began to drop significantly in response to the stock market’s immediate downfall. The simultaneous reaction of Japan’s stock market and property prices led to deflationary issues throughout the country.
Deflation occurs when there is a continuous fall in prices. The fall in prices become the beginning of a greater issue. Consumers and businesses begin losing confidence in the economy by trying to minimize the amount of cash they spend and begin saving more to survive. Optimism levels drop dramatically causing a pattern of ambiguity on whether their country has the ability to recover. While Japan was beginning to endure their setbacks, banks began to eliminate lending as property prices began a downward spiral. Debt rose to extreme levels and many businesses started to notice their financials were diminishing
References: Fingleton, E. (2012, January 6). The Myth of Japan’s Failure. NY Times. Retrieved from http://www.nytimes.com Hill, C. (2013). International Business, Competing in the Global Marketplace (9th ed.). McGraw-Hill Irwin. Shilling, G. (2012, June 4). Japan’s Debt Sustains a Deflationary Depression. Bloomberg News. Retrieved from http://www.bloomberg.com