Is the sun setting on Japan’s economic slump?

A look at Japan's latest plans to revitalise its stagnant economy. Plus, Uber's Chinese misadventures.

Japan’s economic landscape has survived more than most. From devastation in World War II, a miraculous post-war boom, a ‘lost decade’ in the 1990s and now, the world’s most elderly population, Japan’s currently stagnant economy has carved out a unique set of issues.

The world’s third largest economy hasn’t grown in years, with governments consistently failing to battle deflation, that is, when prices and wages do not increase.

Prime Minister Shinzo Abe has been fighting the deflation problem since 2012, using his own brand of economic standards known as ‘Abenomics’ and the ensuing ‘economic arrows’ – lifelines to reinvigorate the staticity.

Abenomics is a three-pronged economic shock therapy, consisting of fiscal stimulus, structural reforms and monetary easing.

The first ‘arrow’ fired was monetary easing, but with Japan’s interest rates already in negative territory, the plan failed to make the impact Abe had hoped for.

Now, Abe plans to fire his second ‘economic arrow’ – stimulus. Cabinet ministers have just approved a $275bn stimulus package to help bolster the Japanese economy. With 26 stimulus packages in the same number of years, however, many are apprehensive about the impact of this new initiative. Prime Minister Abe, undeterred, believes this could be Japan’s saving grace.

“The keyword for the new economic package is very straightforward: investment for the future,” said Prime Minister Abe. “Investment for the future, growing industry such as agriculture and tourism, and investing in child rearing and nursing care to create a future where everyone can become successful.”

Some of the issues standing in the way of Abe’s vision include Japan’s current debt that is nearly two-and-a-half times the size of its economy, a shrinking workforce due to an ageing population and a notoriously low birth-rate, in addition to increased spending on public healthcare.

Independent global economist Jeremy Batstone-Carr harbours no sympathies for the current Japanese dilemma.

“The fact of the matter is Japan was in the sweet spot in the 1970s and 1980s. It then took its eye off the ball, became rather introverted. It tended to focus more on itself rather than its global ambition,” says Batstone-Carr. “There may have been global reasons for that at the time, yet, as a consequence of that wrong-turning … the country has inexorably lost its status and lost its standing.”

Also on this episode of Counting the Cost:

Uber’s Chinese u-turn: Uber is selling out to its Chinese rival Didi Chuxing, ending a rivalry for market share between to the two taxi service companies. Uber’s global business will get a share in Didi, and in return, Didi will get Uber’s brand, data and business in China. This comes at a time when China has formally legalised the use of online taxi-hailing services, with rules not to operate at below-cost.

We speak to Zennon Kapron, managing director at Kapronasia Shanghai, about the challenges of shared economy-based business, how they are seen as ‘threatening’ to the economy and the liability involved in facilitating transactions between third-parties in examples such as Uber, Aibnb and TaskRabbit.

Ethiopia over African skies: With a recent recorded net annual profit of $178m, Ethiopian Airlines is bucking the trend for the rest of the providers in the continent. Poor management, bad investment decisions and government interference are blamed for losses of other African carriers. Analysts praise lack of government interference and solid state support for the growth of Ethiopian Airlines. However, this success story cannot survive on its own, as the aviation industry remains disjointed across Africa.

We speak to Raphael Kuuchi, vice president of IATA, the International Air Transport Association, in Africa about what needs to be done in terms of infrastructure improvements, fleet investments and government intervention to bring the rest of Africa to the same levels of success Ethiopian Airlines is enjoying at the moment.

The post Is the sun setting on Japan’s economic slump? appeared first on African Media Agency.


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