708-Chaudhari Technical Institute, Gandhinagar - Gujarat ...

Japan's Economy
Before Japan's 2011 earthquake and nuclear power plant disaster, its
economy was emerging from the deepest recession since the 1970s. It
rebounded strongly in 2010, when GDP increased by a strong 3% -- the
fastest growth in 20 years. It fell off briefly during the last quarter of 2010, but
was expected to pick up again with stronger exports to fast-growing neighbors
in Asia.
However, Japan lost much of its electricity generation when it shut down
nearly all its nuclear power plants after the earthquake. The economy shrank
.5% in 2011 as manufacturing slowed due to the crisis.
If that weren't bad enough, Japan's economy is still challenged by rising
commodity prices -- the country imports most of its food and oil -- and a
shrinking labor pool, as its population ages. Japan is also challenged by
a debt-to-GDP ratio of more than 200%. Like the U.S, much of Japan's debt
resulted from efforts to stimulate its economy out of a 20-year deflationary
period and recession.
Japan's recession became official in Q4 2008 when GDP growth plummeted
12.9% from a year earlier, the worst decline since the 1974 recession. Japan's
economic collapse was a shock, since Q3 growth was only down .1%,
following a decline of 2.4% inQ2 2008. The severe downturn was a result of
slumping exports in consumer electronics and auto sales, 16% of Japan's
economy and a driving force behinds the country's economic revival from
2002-2008.
Japan's economy had only recently recovered from the deflation that hobbled
it in the 1990s. Japan's economy was up 2.1% in 2007, and 3.2% in Q1 2008,
leading many to believe it had finally grown out of its decade-long recession.
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