Why The Japanese Economy Has a Growth Problem

For a snapshot of the Japanese economy we can start with sluggish GDP growth:

We should also note their aging population:

Japan's economic problems — From: Bloomberg

More than double their GDP, Japan’s debt is large. (However, it is not quite as bad as it appears because the debt that the public holds is projected to fall to 100% of GDP):

Meanwhile, businesses do not like falling prices:

And, the BOJ (Bank of Japan) has kept interest rates at record lows:

Explaining why Japan’s government has not been sufficiently proactive, Bloomberg presented this chart:

Our Bottom Line: Fiscal and Monetary Policy

Facing a GDP growth rate that has hovered close to zero. the Japanese government has had little room to maneuver its fiscal policy (taxes, spending, borrowing) and monetary policy (money and credit supply).

My sources and more: Always excellent for analysis and graphics, this Bloomberg article on Japan’s debt and these infographics illustrate Japan’s economic problems. Please note that the title of this post was slightly edited.

Elaine Schwartz

Elaine Schwartz has spent her career sharing the interesting side of economics. At the Kent Place School in Summit, NJ, she has been honored through an Endowed Chair in Economics and the History Department chairmanship. At the same time, she developed curricula and wrote several books including Understanding Our Economy (originally published by Addison Wesley as Economics Our American Economy) and Econ 101 ½ (Avon Books/Harper Collins). Elaine has also written in the Encyclopedia of New Jersey (Rutgers University Press) and was a featured teacher in the Annenberg/CPB video project “The Economics Classroom.” Beyond the classroom, she has presented Econ 101 ½ talks and led workshops for the Foundation for Teaching Economics, the National Council on Economic Education and for the Concord Coalition.

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