Japan Economics Essay

665 WordsDec 4, 20113 Pages
The economy of Japan, a free market economy, is the third largest in the world[7] after the United States and the People's Republic of China, and ahead of Germany at 4th. According to the International Monetary Fund, the country's per capita GDP(PPP)was at $33,805 or the 24th highest in 2010. For three decades from 1960, Japan experienced rapid economic growth, which was referred to as the Japanese post-war economic miracle. With average growth rates of 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s, Japan was able to establish and maintain itself as the world's second largest economy from 1968 until 2010, when it was supplanted by the People's Republic of China. However, in the second half of the 1980s, rising stock and real estate prices caused the Japanese economy to overheat in what was later to be known as the Japanese asset price bubble. The economic bubble came to an abrupt end as the Tokyo Stock Exchange crashed in 1990–92 and real estate prices peaked in 1991. Growth in Japan throughout the 1990s at 1.5% was slower than growth in other major developed economies, giving rise to the term Lost Decade. The problems of the 1990s may have been exacerbated by domestic policies intended to wring speculative excesses from the stock and real estate markets. With government efforts to revive economic growth throughout the 1990s unsuccessful, Junichiro Koizumi adopted policies to promote exports, effectively raising GDP on an average of 2.1% annually from 2003 to 2007. Subsequently, the global financial crisis and a collapse in domestic demand saw the economy shrink 1.2% in 2008 and 5.0% in 2009. Japan has the world's highest gross sovereign debt amounting at 225% of GDP or US$10.55 trillion. A mountainous, volcanic island country, Japan has inadequate natural resources to support its growing economy and large population. Although many kinds of minerals were

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