Corporate savings are going to the enormous debt of the U. Other factors have contributed to the continued sluggish business activity since Globalization, combined with conservative business practices, is one. Similar conservative stances in the corporate sector can be seen more or less in parallel elsewhere around the globe.
That being said, in Japan economic developments are more conservative than other high-income countries because in Japan this trend has been under way over the last two decades. Though it sounds healthy, this mantra has made the Japanese economy a weaker domestic-demand economy than it was before which, combined with globalization, leaves it susceptible to shocks from abroad.
The ongoing economic crisis underscores the vulnerability of the export-led economy when external demands almost evaporate. At the beginning of the current economic crisis, many economists believed the Japanese economy would be less damaged than the U. But, actually the Japanese economy was more damaged than the U. For example, the peak-to-trough fall of industrial production was as high as 38 percent in Japan, compared with 17 percent in the U. In the wake of this economic decline, the Japanese corporate sector is rectifying its deteriorated balance sheets, again.
Japanese businesses appear to be stuck in a pool of quicksand that keeps growing around them. Over the next decades Japan will continue to grow older and will have fewer and fewer families. From an economic point of view, this situation will lead to a smaller labor forces and less saving. Japanese households at one time saved almost one-quarter of their disposable income, but the ratio is already down to about three percent, less than the current saving rate in the U.
The Bank of Japan last month lifted its ceiling on government bond purchases as the government ramps up spending. The BOJ is also expected to introduce another lending program for small companies at an emergency meeting that could be held as early as this week.
Despite the rising sense of crisis, Japan so far appears to be doing less badly than other major economies. The U. In recent days, infection rates have plunged and the government last week lifted its state of emergency for 39 of the 47 prefectures , although Tokyo and other dense economic centers still remain under heavy restrictions. Businessmen walk past a clothing store in Sendai on Friday. Asian economies are leading the way for a global economic recovery, in what some have called a "Zoom boom".
This refers to the increase in demand for screens and laptops as more people work from home, and use online meeting platforms like Zoom.
Asian economies are among the largest producers of laptops, communication equipment and other electronics. A rise in domestic demand as well as exports have helped drive economic growth in Japan.
This turnaround is the fastest pace on record for Japanese economic growth. Japan was last in recession through the second quarter last year. The poll found Japan's economy would grow at a much slower rate over the next two quarters than the United States, which is said to be on track to recover all the output it lost due to the health crisis this quarter. Japan's growth outlook is facing pressure from slowing economic activity and demand at home, both hit by the government's move to extend the coronavirus emergency curbs in Tokyo and other major areas through June
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