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Economy Current Assessment (August 2008) |
Japanese economy has now
entered a recession phase. This has been triggered by a global slowdown
illustrating taht Japan economy is still very much dependant on exports
for growth (see our GDP Growth Table)
Local factors such ahas rehgular tax increases to finance growing
deficits have played a role. The strustural problems outlined below have
also payed a role and especially the massive retirement of baby boomers. |
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Other economy pages |
Latest GDP Figures
Latest GDP Comments
Previous
assessment of Japanese economy
Blog Invest Japan |
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Japan Structural Problems |
We believe that 4 major
structural factors are preventing Japanese economy to recover:
- Few good opportunities for business development in Japan. Japan is an
extremely regulated country where development of new business is
hampered by tight regulations. One illustration is the impact that such
a small regulation change such as loosening the rules limiting height of
buildings had on the real estate market.
- Debt trap. Official figure for Public deficit represents 160% of GDP.
Government budget deficit is around 35B$ representing 8% of Japan GDP.
Primary deficit is 6%.
- Aging of population. Birth rate is 1.29 per women and less than 1 in
Tokyo. (2.1 is necessary to ensure long term population stability).
Japanese population is expected to start decreasing from 2006. Massive
retirement of baby boom generation will also start in 2006 This will
induce shrinking markets for most products and also heavy burden on
public finance reinforcing the debt trap.
- High marginal personal tax rates (over 50%) create disincentive for
work. Raise in tax rates further aggravates the situation |
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Note:
This overall negative assessment for the Japanese economy does not
prevent good investment opportunities to exist for investors. |
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