The country behind the Japan Postwar miracle story, which successfully rose from its ashes and emerged as a war survivor in the last 20th century after World War II, is currently at the opposite end of today’s pole. The Japanese economy, once the third-largest economy, preceded by the USA and China in terms of its prosperity and economic growth, is heading towards its lowest ever rate of development with the fear of an onset of recession dangling over the entire nation as the growth rate keeps on showing augmented contracting trends in every successive quarter.
The Japanese economy has shown a sharp decline in its growth level, with its contraction rates reaching up to as high as 7.8% in the second yearly quarter of the fiscal year 2019-20. The widespread Coronavirus, originated in the Chinese provinces has further aggravated the decline in the economy being faced by the Japanese with the weak consumer demand and a consequent lower money supply in the form of household earnings as well as the sharp halt on the Japanese tourism income and a thwarting force on its exports plunging the economy to a big-time low with an impact as stringent as the 2008 Financial Crisis.
The economy witnessed an annualized decline in its Gross Domestic Product level by as high as 28.1% in early 2020, indicating the worst decline after the post-war crisis, which had earlier obliterated the economy in the last 20th century after the onset of World War II. The receding economy has been put forth in the light of the succession of the Prime ministerial post by the nation’s new prime minister Yoshihide Suga following the resignation of the former Prime Minister Shinzo Abe. The downward spiraling economic conditions have created a humongous task in front of the newly elected leader to combat lower growth rates and devise methodologies and strategies to combat these recessive conditions.
THE NATIONAL EMERGENCY: A BOON OR A BANE?
The nation was exposed to the lowest ever economic prosperity in the wake of the imposition of National Emergency by the former Prime minister Shinzo Abe in late April-May to combat the increasingly widespread of Covid-19 and the consequent increase in casualties owing to the virus. The nation emergency led the people to withhold their spending and stay indoors while limiting their outdoor activities, which led to a decrease in the consumer level.
The economy was standing at a stagnant stage. The former government initiated various economic measures such as the disbursal of stimulus packages in cash handouts and zero-interest loans to boost the economy and its spending. The stimulus packages proved effective in controlling the rate of unemployment and sharpening bankruptcies. Owing to the national emergency, the businesses and firms had to lay off their workers because of the lack of funds to repay their salary obligations.
The government took effective control of the situation by imposing stringent regulations to ensure that the workers have job security and an income avenue to return after the emergency. Being reinforced by these security measures introduced by the government, the Japanese economy was able to achieve a rebound on the end of the national emergency impositions where the workers and employees were able to get back to their works and proceed with their economic contributions that again provided a boost to the flow of income and spending in the economy. The provision of the subsidiaries and the cash handouts resulted in people having excess spending capacity and liquidity, which promoted the nation’s cash flow by a considerable rate. The country once again saw a revival in the rates of industrial production and retail sales.
RESPITE SHORT LIVED
However, the reprise proved out to be short-lived for the economy. As the Coronavirus cases started steadily rising in the nation in the second half of the year, the slowdown once again obliterated the economic steadiness witnessed in a previous couple of months. The citizens heavily criticized the new authority in power for eliminating all the previously imposed restrictions on the movement of the goods and people that led to a sudden burst of the active cases of the virus affected population. The states started imposing another series of restrictions to control the virus’s spread, which again heightened the nervousness and fear amongst the consumer market and started withholding their spending once again. The revival of the slowdown once again overpowered the nation’s economic respite as an aftermath of the national emergency. This time, the corporate and firms were the worst affected by this sluggish economic phase as they anticipated downfall of about 35-40% loss in their profit rates until the end of the fiscal year by March 2021.
Even though the country and the administration were able to keep the number of cases and casualties caused to the spread of the pandemic in check, the nation was tumbled down the slope by huge margins, resulting in indelible economic impacts on the primary sectors of the country. Various economists and researchers, along with the nation’s governing authorities, have been left pondering over how to revive and bring the economy back to its track. Amidst the uncertainty over the containment of the virus in the coming future with a lack of any precautionary measures available at the global level has left the Japanese economy in a state of skepticism over how to proceed further, with many public policymakers stating that the economy may take up to three-four years to retain the economic threshold position that was previously carved.
However, with the combined efforts and diligence of the policymakers and the stakeholders, the economy is carefully treading on to the path of its much-needed revival of the nation’s “Ikigai”!