Paper Market Japan
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Japan
Japanese market in the past
The japanese economy faced deflation for seven years in the past, until the introduced quantitative easing policy gave rise to economic growth and stability in the country. The, from the policy, resulting low long term interest rates led to more business and private investment, restructuring processes, encouraged economic growth and prevented more deflation. Since 2002 Japans output increased at around two percent annual rate and the country gained high profits due to strong exports, especially with its neighbour China in the last two years.
Japanese market today
Although investment is, due to slowly increasing long term interest rates, rather decrasing today, the increase in employment gains compensates this. The further ongoing growing private consumption still stimulates the japanese economy. This helps to abandon the era of deflation in Japan. In this coherency also the formerly, for japanese circumstances, high unemployment rate of nearly five percent relaxed somewhat. The nominal exchange rate of Japan fluctuated over the last ten years, but since 2004 the Yen appreciates against the Dollar, the currency of the United States. It is because of those reasons that the economy in Japan is constantly stabilising today.
Overall there are still some problems in the economy. The increase in public debt, followed from too much borrowing in the past could lead to a decrease in nominal wages. Especially in the case of sharply increasing interest rates, a drastic decrease in consumption could be the consequence. Furthermore a decrease in world wide trade, maybe as a result from an oil crisis, could heavily hit Japan. This is because a major part of the countries output and economic growth was driven by the huge foreign demand for Japans export goods.
Japanese market in the future
Short and long term interest rates are expected to increase further to an adequate level of two percent (long term) and one percent (short term) in the near future and are not expected to increase much too high after the ending in the quantitative easing policy. Together with the displaced deflation these two factors will lead to increasing consumption