First Sign of Growth in April 09 After Three Worst Months Reported: Japanese Economy

After three months of continuous downfall and contraction of economy from January 09 to March 09, Finance Ministry of Japan has reported some improvement in exports which is still down by 39.1% in April, but showing some growth compare to 45.5% down in March and 49.4% down in February. The ministry announced that 68.95 billion yen of trade surplus of Japan is still low about 85% to previous year. However, the rising demand in Asian countries, especially in China has contributed much to this improvement in exports.

Japan has reported third consecutive monthly trade surplus, following a record trade deficit in January when entire global demand of cars, TV and electronic goods was collapsed by the global recession originated in and triggered by American sub prime crisis. As we all know, Japanese economy is thoroughly depend upon the imports of raw materials and imports of ready made products after  processing of raw materials, imports has also shown a downfall of 35.8% in April.

However, experts say that this trade surplus is precisely induced by fiscal stimulus injected in the economy by the government and the industrial production output has shown a positive sign of growth in April following the worst three months of sharpest contraction in the economy by 4% of its GDP witnessed by Japanese economy in the Post War era.  Despite the positive sign of production output in April, there are concerns rising because of the experts’ opinion that this stimulus will not be effective for the stable growth of economy as the liquidity will fade away in a year or so injected by this fiscal stimulus which is about 15.4 trillion yen unveiled last month.

This graph of industrial output also implies some improvement in the end of this fiscal as there are some predictions also that the speed of worsening is slightly moderated in economy. However, Japanese products are facing tough competition in the international market compare to cheap Chinese products; Japanese companies have still a long way to go as they have to further reduce their costs to overpower Chinese competition.

We all know that Japan’s biggest exporting partner country America is currently deeply struck in the global crisis leading a sharp slump in the American domestic demand. Japanese companies are left with no choice but to concentrate on Asian market which is still retaining its domestic demand as China, India and Brazil in Latin America. (reference: Ministry of Finance, Japan)