After four quarters of steadily decrease in economic activity, the second quarter of this year offers good signs for the overall economy of Japan. Does this mean that Japan has conquered the global economic crisis? Not yet, but they have embarked on the right way to do so.
As most national banks the Bank of Japan has been pumping huge amounts of money into the national economy to stabilize and improve the situation. Now they have decided is the right time to stop all these actions because they could hinder the natural recovery of Japan. So now the banks main objective is to strengthen the national currency. The yen has already improved its value against the US dollar. While this could hurt the export sector as one of Japans main markets is the USA, in the long term it is believed that it will benefit the whole country. Seems quite a risky step as export levels are already down and Japan is very dependent on the economic situation of USA. Although the technological and quality levels of Japan’s goods are up to date they should be vary of one fact. What if USA switches its full attention to China? Granted the quality levels cannot be compared to Japan, but the costs and quantity can be very attractive for US importers. None the less these are finally some good news for Japan. If the global situation keeps improving then Japan surely will overcome the global crisis and reach total recovery.
Of course this will not happen overnight, but these are the first good signs. I really do hope that Japan succeeds in their recovery plans as I believe that Japan is a vital part of overall global recovery. The faster this happen the better for us all.
