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More Bad News Hits Japan’s Economy

August 29th, 2009
The world’s second largest economy remains in deep trouble, despite an official rate of GDP growth in Q2 of .9%. This figure, trumpeted by financial cheerleaders as the “end” of the Japanese recession, was due to massive deficit-driven government stimulus spending. The true state of Japan’s economy is reflected in the latest unemployment numbers.

Official figures just released reveal that Japan’s unemployment rate has increased to 5.7%, its highest level since the end of the Second World War. To put this number in perspective, the number of Japanese workers unemployed is more than one million higher than one year ago. In addition, consumer prices continue to fall, continuing Japan’s dangerous deflationary spiral. Deflation is particularly feared in Japan, as this destructive economic force was responsible for the prolonged L shaped Japanese recession of the 1990s.

The horrible economic news will undoubtedly be the kiss of death for the ruling Liberal Democratic Party, expected to go down to a humiliating landslide defeat in this weekend’s general election in Japan. However, it is doubtful if even a political transformation in Tokyo will bring quick relief to the Japanese economic crisis.


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