Japan Agrees to Release a Whopping $116 Billion to Support its Economy

Japan Agrees to Release a Whopping $116 Billion to Support its Economy

01/06/2016 0 Di Redazione

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swap-japan-splashJapan Agrees to Release a Whopping $116 Billion to Support its Economy

It is evi­dent that the Japa­ne­se Govern­ment has been making efforts to boo­st its eco­no­my. Accor­ding to the late­st news, the govern­ment has given its appro­val to relea­se $116 bil­lion Yen into the eco­no­my.

Bei­jing, Chi­na, May 31, 2016 -(Pres­sRe­lea­se­Point)- The govern­ment is hoping that the extra money being pushed into the mar­ket will help Japan over­co­me reces­sion. This money will be spent on impro­ving infra­struc­tu­re and busi­nes­ses. In the long run, the govern­ment hopes that this will attract more and more inve­stors.
The govern­ment is also hoping that this extra money will lead to the crea­tion of appro­xi­ma­te­ly 600,000 new jobs and will boo­st the eco­no­my by 2%.
The world has been hit by slo­wed glo­bal demand. This, accom­pa­nied with redu­ced dome­stic con­sump­tion and exports, has affec­ted the Japa­ne­se eco­no­my nega­ti­ve­ly. The Japa­ne­se eco­no­my faced con­stant con­trac­tions during the last two quar­ters and has now gone into reces­sion.
Shin­zo Abe, the Pri­me Mini­ster of Japan, put bla­me on the pre­vious govern­ment. Tal­king to a group of jour­na­lists, the Pri­me Mini­ster said that Japan is today in a sta­te of reces­sion becau­se the pre­vious admi­ni­stra­tion fai­led to boo­st the eco­no­my and crea­te gro­wth. He fur­ther said that to fight the cur­rent sce­na­rio, Japan must desi­gn a stra­te­gy that focu­ses on crea­ting jobs and rai­se inco­mes. This is the only way to achie­ve sustai­na­ble gro­wth in Japan.
The money that the Japa­ne­se govern­ment is relea­sing will be used to rebuild areas destroyed by the ear­th­qua­ke and tsu­na­mi of 2011 and sup­port regio­nal eco­no­mies. It will also be used for pro­mo­ting edu­ca­tion and social secu­ri­ty.
Yen has been decli­ning
The Pri­me Mini­ster of Japan has pro­mi­sed to take effi­cient mea­su­res to bring the Japa­ne­se eco­no­my back on track. One of the fir­st things that the Japa­ne­se govern­ment plans to do is to make Yen fall in value.
Finan­cial ana­lysts are of the opi­nion that a wea­ke­ned Yen will affect the exports posi­ti­ve­ly. Once the Yen deva­lues, the pri­ce of Japa­ne­se pro­duc­ts will also redu­ce for forei­gn buyers. This will lead to an increa­se in exports. Not just that, Japa­ne­se expor­ters will help pull the eco­no­my out of sta­gna­tion by put­ting their extra ear­nings back into the Japa­ne­se mar­ke­ts.
For­tu­na­te­ly, sin­ce last Novem­ber, the Yen has alrea­dy drop­ped by 12% again­st the Dol­lar. On Fri­day, it mea­su­red 88.97 per dol­lar.
In a recent sta­te­ment, the govern­ment cla­ri­fied that it has been kee­ping an eye on the Yen and will inter­ve­ne if need be.
In other good news, Japa­ne­se share pri­ces have gone up. This has led the Nik­kei 225 to gain 1.4%.
Japan has been fighting defla­tion and sta­gnan­cy for many years now. All efforts of Japa­ne­se poli­cy-makers to pull the eco­no­my out of defla­tion have fai­led in the past. The govern­ment hopes that the $116 bil­lion sti­mu­lus being pushed into the Japa­ne­se eco­no­my will punc­tu­re defla­tion.
Michael Lane, Glo­bal Co-Head of the Invest­ment Mana­ge­ment Divi­sion at Shi­zuo­ka Capi­tal Wealth Mana­ge­ment says,” Until now, wha­te­ver mea­su­res the govern­ment has taken, have been aimed at kick-star­ting the eco­no­my. At this point, the govern­ment needs to think beyond that.”
Japan has been hit by low demand from its three key mar­ke­ts — US, Euro­zo­ne and Chi­na. Whi­le demand from the US and the Euro­zo­ne has decli­ned as the­se two zones are strug­gling with their own eco­no­mies, a decli­ne in demand from Chi­na has occur­red due to Japa­n’s ter­ri­to­rial dispu­te with the Chi­na. The­se fac­tors have direc­tly affec­ted Japa­n’s exports and eco­no­my.
Japa­n’s ter­ri­to­rial dispu­te with Chi­na has hit the coun­try espe­cial­ly har­der. Chi­na is one of the big­ge­st tra­ding part­ners of Japan. It is also one of the faste­st gro­wing con­su­mer mar­ke­ts. At this point, Japan can­not afford to offend Chi­na.
If Japan wan­ts to take the road going towards eco­no­mic gro­wth, it must work on its rela­tions with Chi­na. The eco­no­mists have alrea­dy pre­dic­ted that the US and Euro­zo­ne will take a whi­le to come out of the finan­cial cri­sis that has hit them. In such a situa­tion, Chi­na can play a pivo­tal role in impro­ving Japa­n’s exports and its eco­no­my.Lane says, “If Japan wan­ts to take the road going towards eco­no­mic gro­wth, it must work on its rela­tions with Chi­na. The eco­no­mists have alrea­dy pre­dic­ted that the US and Euro­zo­ne will take a whi­le to come out of the finan­cial cri­sis that has hit them. In such a situa­tion, Chi­na can play a pivo­tal role in impro­ving Japa­n’s exports and its eco­no­my.
Lane fur­ther added, “Other than wor­king on its rela­tions with Chi­na, Japan needs to make fur­ther efforts to impro­ve its eco­no­my. If Japan wan­ts to fight reces­sion, it must attract the atten­tion of glo­bal inve­stors across the world. To achie­ve this, the coun­try will have to start by spen­ding on key areas like heal­th­ca­re, retail, con­struc­tion and agri­cul­tu­re.”

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