![]() ![]() The economists determined the country’s latest contraction began in November 2018 when its exports bore the brunt of an escalating US-China trade war and was bookended by a Japan economic crisis with a steep 30% contraction when the Covid-19 pandemic struck in the second quarter of 2020, leading to widespread lockdowns. The last Japan recession occurred in 2018 and lasted 18 months, according to an analysis by a Cabinet Office panel of economists. Japan’s recessions tend to run against Western business cycles, with two notable downturns coming while the West was experiencing strong growth. Governments may also try to respond with expansionary fiscal policy by cutting taxes to stimulate incomes, but this is much more of a political decision than those taken by central banks. Policy responses tend to try and stimulate the economy out of a recession, with central banks cutting interest rates and pumping more liquidity into the financial system through quantitative easing, though this depends on the state of inflation. It signals falling incomes and profits for businesses, which can in turn cause wages to fall for workers or increase unemployment, hurting consumption and forcing a further reduction in incomes. While the former is a seemingly innocuous barometer, recessions indicate a broader issue with the economy, suggesting either an exogenous shock or a downturn in the natural business cycle. In the US, for example, the Business Cycle Dating Committee at the National Board of Economic Research (NBER) officially announces a recession, taking a more measured approach, observing economic indicators like unemployment, income and consumption in addition to a decline in output. ![]() Recessions are technically defined as two consecutive periods of negative economic growth, with those periods typically quarterly. With inflation at an eight-year high and the promise of further stimulus to come, analysts are fearful that the central bank may be forced to turn hawkish and inspire the next Japan recession. Japan continues to push the limits of its economic recovery as the country finally eases out of the Covid-19 pandemic, but headwinds abound. Rising inflation, weak yen spur government stimulus to stem unprecedented risks to economy Photo: siriwat sriphojaroen / Shutterstock
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |