* A majority centre-left political party rules Japan (DPJ) * Yoshihiko Noda is its seventh Prime Minister in six years. The previous PM resigned due to a poor approval rating due to his handling of the Tohoku earthquake and the Fukushima nuclear disaster. * On-going issue with South Korea/China regarding islets, hesitation over nuclear power and a bill to raise consumption tax maybe enough to oust Noda from power. Island dispute has led to forecasts suggesting fourth quarter Japanese car sales in China are to drop 70%, leading to a dip in GDP. * 90.5% in control of corruption study, 78.2% in regulatory quality and 79.2% in political stability/absence of violence. * 8.0 on TI’s CPI index of 2011.
* There are plans to significantly change the ineffective bureaucracy of the civil service by reassigning senior employees into private companies. The practice is thought to bind public and private sector and prevent political and economic change. Economic
* Member of the G8 and has the world’s 3rd largest economy (GDP = $5.869tn). Its major industries include cars, steel, electrical goods and it is a leader in innovation. Japan is 24th in the ‘ease of doing business’ survey (World Bank, 2011), down four places from 2010 mainly for excessive bureaucratic procedure. * It has a liberal manufacturing sector but protectionism still prevalent in the agricultural industry. Also, high tariffs and import quotas are imposed on foods. Certain services are subject to licencing and restrictions on foreign investment. Trade reforms in the services sector have slowed with the exception of the airline industry due to the pursuit of ‘open skies’ agreements. There are non-discriminatory restrictions on the establishment of large-scale stores, zoning and import licences. * Exports fell 10% in September 2012 as imports rose 4.4%. Japan has a stagnant economy with a sovereign debt that is 200% of GDP. It is a deflationary environment with interest rates at their lowest ever levels, leaving little room to lower them if economic stimulus is needed. Unemployment hit record high in 2009 but has improved since then. The figure is now 4.2%. * Since 2009, Japan has refrained from introducing new trade barriers, notwithstanding the onset of the global financial crisis. It has introduced few measures aimed at further liberalizing its trade and trade-related regime. Compared to other OECD countries, Japan has a low FDI influx due to a relatively high corporate tax rates which are soon to be reduced from 40% to 35% to stimulate this needed FDI. Social
* Japan’s population is 128m however by 2060 this is expected to fall by a third due to low birth rates and long life expectancies. Japan is suffering from an ageing population, 23.9% is over 65. * Ethnically homogenous nation, 98.5% of the population is of Japanese origin. Japan has high rates of inequality, even comparative to other OECD nations. Gender gap second highest in OECD as women are under-represented in the labour market except among non-regular workers. Social spending concentrated on ill-health and old-age rather than reducing poverty or social inequalities. Social welfare is less than half of OECD average. Technology
* Japan has modern road, rail and sea networks. Its telecommunication system is advanced consisting of private and public service provider. Japan is the world’s biggest LNG importer and relied on oil imports to meet 42% of its energy demands in 2010 as it lacks sufficient resources on home soil. * In 2011, all nuclear plants were shut down until July 2012 due to safety concerns, heightening the need for imports. Japan is the 5th largest carbon emitter in the world and reports suggest it is struggling to meet its Kyoto protocol demands. Despite this, Japan eyes a 50% greenhouse gas cut throughout the world by 2050 and intends to be at the forefront of this initiative. The electricity market is divided up into 10 regulated companies. Energy industry leader Tepco has raised corporate rates by 17% and household rates by 8% due to costs incurred and increased costs resulting from the Fukushima disaster. Japan has a very sophisticated IP system. The highest number of patents granted worldwide originate from Japan. 23% of global R&D spending is in Japan.
* The crisis erupted when Japan was in the midst of a long but moderate recovery from a period of domestic economic stagnation. Given that the weakness of the U.S. economy has significantly reduced external demand for Japanese manufactured goods, the crisis has wiped out many of those meagre gains * The economy contracted at a rate of 12.1% quarter-on-quarter in the fourth quarter of 2008, far worse than the 6.2% contraction in the US economy. * Real GDP fell 8.6% (Q2 '08 - Q1'09) i.e.: ¥50trn—more than the total value of the GDP of either Taiwan/Indonesia * Japan’s economic model of export-led growth left it very exposed to the collapse in world trade. * Industrial production has fallen by 31 percent since its peak for this cycle (February 2008), again far worse than the 11 percent drop from peak for US industrial production (January 2008). * Japan experienced the sharpest recession of any major economy during the global financial and economic crisis. * The government developed a three stage stimulus package - August, October and December 2009 totalling $1.6 trillion dollars (25% GDP) to minimise the risk of a “negative spiral” in the short term and the challenge of achieving sustainable growth in the medium to long term * Aims of stimulus are to establish a low-carbon economy by investing in solar power, fuel-efficient vehicles and energy-efficient infrastructure. Also to revitalise local healthcare services, accelerate the development of medical technology and expand funding for childcare). * This may have prevented a much worse recession, but at the cost of worsening the government’s already severe fiscal problems. * After a sharp contraction during the 2008-09 global financial crisis, Japan posted real GDP growth of 4% in 2010 and was showing every sign of continuing its economic expansion this year. But the March earthquake then pushed the country into recession * Rapid decline in stock prices and a worsening of conditions for issuing corporate bonds. It is estimated that the diffusion index for financial positions and lending attitudes of financial institutions, irrespective of company size, deteriorated, falling close to the level at the end of the 1990s * Continuous and sharp decline in both imports and exports of goods. The reduction in exports of goods was due to the decrease in demand from advanced economies such as the US and the UK during the financial crisis. The decline in 2009 was the largest decline in exports of goods since 1980 and has changed Japan’s real economy dramatically. Unemployment rose between 2008 and 2009. At around the same time there was a sharp drop in private consumption and a short-term rise in inflation. * Between 2007 and 2009 there was a gradual drop in the exchange rate between the Japanese yen and the US dollar. * Decline in number of higher education students and also graduate employment rate.