By the Japanese yen continued to rise, as well as sluggish domestic demand, both internal and external factors that pincer attack, the Japanese economic downside risks continue to grow. Japanese government released the latest monthly economic report recognizes the critical level of the current economic environment is increasing. To this end, the Japanese government issued a nearly trillion yen economic stimulus plan, but the smooth implementation of the plan are still faced with multiple uncertainties.

Japan’s economy is facing internal and external environment has changed. The first is the uncertainty of the external environment increases. Financial crisis, U.S. economic trends and erratic as sluggish domestic demand, the European economic recovery is also due to the problem of sovereign debt has become very difficult. This situation inevitably leads to the dollar, the euro weakened the yen as the currency safer sought after by the market. To stimulate economic growth, the Obama administration’s plan to double exports, Europe is induced euro, Europe and the United States national and regional subjective tolerance attitude within the currency depreciation is more accelerated pace of appreciation of the yen and led to higher yen unilateral situation .

Higher yen dragged down not only the Japanese stock market, the main thing is the Japanese corporate earnings will be compressed. If the yen surged more than words, Japanese companies will have to shift to overseas production base, thereby increasing the hollowing out of domestic industry and employment. METI survey, if the yen continues to rise, about 6 percent manufacturing companies will shift their production bases overseas.

Japan’s economy is facing another big problem is the internal economic situation is not optimistic. Population decline and aging, high unemployment, fiscal deterioration and other problems still have not improved, in particular the appreciation of the yen makes Japan out of deflation has become more difficult.

Financial crisis, the Japanese economy would soon embark on the recovery track, the main thing is to rely on external demand. Although the government under a series of economic stimulus measures to boost domestic consumption has been restored, but the stimulus is to advance the future of national consumption, not real consumption recovery.

Japan’s economy is facing changes in the external economic environment, may cause the economy just on track to recovery once again stalled. To this end, the Japanese government has announced a 915 billion yen of new economic stimulus package, expected to pull 9.8 trillion yen investment in related projects to promote employment, stimulating spending, deal with various possible risk of deterioration of the Japanese economy.

Can be said that the expansion of employment, stimulate consumption, and to prevent further appreciation of the yen is the new main purpose of the economic stimulus plan. Japanese government plan is expected to create 20 million jobs, and boost GDP growth of 0.3%.

However, Japan’s new economic measures and the timely implementation of the desired goal, still faces many uncertainties. First, political considerations. Democratic Party of the upcoming elections, the party serving on behalf of the Prime Minister Naoto Kan and Ichiro Ozawa, the party’s former general of the representative position is the next race, if the representatives undergo, according to Japanese law, the prime minister will be going away with the economic policy may The changes and adjustments. Moreover, even if the Prime Minister remains unchanged, the Japanese opposition party’s majority in the Senate, the ruling party’s economic policies against the opposition parties may not be implemented rapidly, thus affecting the policy effect.

Followed by the yen’s appreciation. The current round of yen appreciation is mainly Europe and the United States economic trends and macroeconomic policy caused, together with Europe and the United States and Japan can not intervene in currency markets, even if the Japanese government and central bank intervention is determined separately, it is likely to no avail. If the yen continues to appreciate the economic stimulus effect will be offset. Therefore, Japan’s new economic measures is difficult to predict whether the expected results.

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Category: Business Management
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