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2009年1月 5日 (月)

急変する世界 「トヨタショック」克服の道は、不況のツナミに襲われた日本

The Yomiuri Shimbun (Jan. 5, 2009)

Fundamental change needed to lift economy

急変する世界 「トヨタショック」克服の道は、不況のツナミに襲われた日本(15日付・読売社説)

The traces of sunlight that only a short while ago greeted Japan's economy have disappeared behind dark clouds that have gathered in little more than the blink of an eye, and which are now battering the nation's economy with stormy conditions as it sets sail in the turbulent seas of 2009.



If Japan is to reach the port of recovery, it will need a well-devised map to help it navigate this once-in-a-century tempest.


First, the government must establish what the weaknesses are in the nation's economy and consider countermeasures.


A major problem is that domestic and foreign demand, the two engines powering Japan's economic growth, are out of kilter.


Through processing trade, in which imported raw materials are manufactured into goods that are then sold to foreign countries, Japan realized rapid economic growth after World War II.


This model depends heavily on foreign demand, especially from the United States and advanced nations in Europe. But although efforts have been made to expand the operations of Japanese firms through overseas factories, there have been no substantial changes in the fundamental reliance on overseas markets.




Finding new markets

The financial crisis has been growing in the United States and European markets--the main drivers of foreign demand--which has caused a dramatic slowing in one of the two engines of demand.


Toyota Motor Corp., which enjoyed an operating profit of more than 2 trillion yen in the last business year, is struggling this year, forecasting operating profits will fall into the red by 150 billion yen.


This "Toyota shock" highlights the unprecedented woes facing Japan's export industry as it is engulfed by the global economic downturn.



And although they had enjoyed high growth, emerging markets in Asia, particularly China and India, are seeing their growth prospects cloud over, too. Japanese companies must now actively seek major new markets in an effort to secure more balanced foreign demand.


However, it is a tall order selling high-end, expensive Japanese products on a large scale to developing countries. A new business model should therefore be developed that allows the country to profit from passing on the benefits and know-how of its production technology.


Because Japanese firms depend so heavily on foreign demand, the nation's economy is vulnerable to foreign exchange fluctuations. The yen has, for example, risen to about 90 yen per U.S. dollar, slashing the profits of export-dependent companies.



New opportunities

However, the yen's rising value could open up new strategies for Japanese firms, such as making it possible to acquire healthy foreign companies. The strengthening yen should therefore be seen not as a jam, but as an opportunity to take advantage of the current turmoil.


From a medium- to long-term perspective, the country's aging society, with its declining birthrate and falling population, also will make it difficult to chart an effective economic course.



A shift to domestic demand-led economic growth has long been called for. But in the long run, the size of the domestic economy is tending to shrink.


Under these circumstances, the key to activating domestic demand lays in Japan's savings ratio--one of the highest in the world, and a point of pride for the country.

An estimated 1.5 yen quadrillion is effectively kept under mattresses. Boosting domestic demand and preparing for future generations can both be realized if this huge supply of money is utilized for investment in social infrastructure.



Beating negative growth

The government downgraded its forecast for the nation's real gross domestic product in fiscal 2008 to minus territory--the first negative growth in seven years.


The government is aiming for zero growth in real GDP in fiscal 2009, a goal it has set in order to try and prevent negative growth. But many analysts in the private sector expect the economy to register negative growth for two straight years.

The government also has predicted that consumer prices will drop by 0.4 points in the next fiscal year, sparking concerns of deflation.


With it becoming increasingly difficult to secure loans, even some companies turning a profit have gone bankrupt because of cash flow problems. To avoid deflation being exacerbated by tighter constraints on credit as happened 10 years ago, the government should implement policies that will be effective in preventing such aggravated deflation.


The government will implement economic stimulus measures worth 75 trillion yen through two supplementary budgets and the fiscal 2009 budget. The Bank of Japan, meanwhile, lowered its key interest rate by 0.2 percentage points to 0.1 percent.



Stimulus might not suffice

This may not be enough. The state's finances now face a further crisis as tax revenues fall due to the recession. But this is not the time to hesitate in increasing public spending on necessary measures to boost the economy.


Without first restructuring the economy, the conditions necessary for a hike in the consumption tax rate, which is aimed at securing the stable financial resources for social security, will remain elusive.


However, a boost in public spending should not merely be an excuse for pork-barrel spending.


What is initially necessary are measures to ease the pain caused by the economic downturn, such as properly addressing unemployment. Also, the government should be quick to plug damaging holes left by social security expenditure cuts, such as to emergency medical services.


The number of public works projects, meanwhile, should be narrowed to areas linked to public safety and improving the quality of the nation's infrastructure, such as increasing earthquake resistance.


Toward the end of last year, automakers and other major companies decided one after another to reduce production. As a result, many people have lost their jobs and accommodation simultaneously, and have been left homeless.


Yet measures to boost employment submitted separately by the ruling and opposition blocs were uncoordinated, meaning they could not be realized before the new year.


If the ruling and opposition parties want to nail their colors to the mast of prioritizing the economy they should cooperate in an effort to speed up the realization of appropriate policies.


(From The Yomiuri Shimbun, Jan. 5, 2009)

2009150131  読売新聞)


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