Sunday, April 17, 2011

Japan: How Unfortunate Events are Wrecking Their Economy

Japan is the world's third largest economy, and the damage done to their economy is all but equal to the horrifying death toll resulting from last month's earthquake and tsunami.  Early signs suggest that the disaster could throw Japan into another recession.  Last month, the Markit/JMMA (a purchasing manager's index that measures the robustness of manufacturing) showed that Japan suffered the greatest one-month plunge in the entire survery's history.  According to, a research firm known as Capital Economics predicts that Japan's economy will contract 1.4% in 2011.  On a brighter note, the impact on the global economy might be limited, since Japan exports to the rest of the world more than it imports from it.  However, the more significant aftershocks could take place later, if the earthquake significantly "worsens the country's feeble national finances."  Japan's debt is at about 200% of GDP, which is the highest in the rich world.  The cost of reconstruction and possible delays in budget cutting could potentially 'shake' their country right into another debt crisis.

Although I do not have much knowledge of Japan and how greatly their economy affects ours, I must say that any sort of national crisis for them would damage our economy at least a small amount.  Also, I feel bad for them and their situation right now, and I'm sure a great number of people are doing their part to help.  Even the U.S.  And where was everyone else when Hurricane Katrina hit America?  Nowhere to be found.  But that's okay, we'll pick up the damage for everyone else, cause that's just how we are.

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