globalEDGE Blog: Japan Enters Recession

Japan Enters Recession

File under: China, Japan, Economy,

Many analysts anticipated the growing possibility of the 3rd largest economy falling into recession in the short future and the time has now come. The analysts expect that Japan will stay in recession in the final quarter of the year due to sluggish trade to China, a strong yen, and the effects of the tsunami that ravished the country over a year ago.

Official data on Monday morning showed Japans economy contracted during the second quarter this year by .03% and then by another .09% between July and September. The increasing contraction trend of the economy is putting more pressure on the government and Bank of Japan to take more steps to boost the economy.

The downfall is partly due to a strong Yen that has weakened exports because they have become so expensive and increased cheap imports from countries such as China. The strong Yen is great for baby boomers, but many now realize that it is not good for the younger generation.

The tourism industry can be blamed for the recession as well. Since the nuclear disaster and tsunami, tourism has been at the lowest levels in decades. It has scared western tourists and the ongoing situation between China and Japan is not helping matters, with the Chinese government strongly advising its citizens to not travel to Japan.

We can only hope that the government and Bank of Japan come up with a fiscal policy to stimulate the economy out of recession.