What of the
As I read this, I wondered about this problem with the economy of the Japan might affect missionary work there in the future. What do you think?
Japanese Economy 2010 and Beyond
The UK budget deficit is
predicted to rise from 40% of GDP last year, to 100% of GDP by 2014.
Japan by comparison already has a budget deficit of 218% this year
and a predicted deficit of 246% by 2014. Japan has a real problem in the
unprecedented scale of its fiscal deficit. It also has a real problem
with deflation. Japanese consumer prices fell 2.4% in September, the
largest on record.
Demographics are working against Japan. The workforce is contracting due to low population growth and an ageing population. The Japanese economy has stagnated (grown below potential) ever since its 1980s bubble burst.
The economic situation is dire.
The immediate policy response should be to end deflation. Japan
desperately needs a positive rate of inflation. This will help prevent
real debt burden rising. Inflation will reduce the value of the Yen,
making exports more competitive.
Why has Huge Budget Deficits failed to boost Growth in Japan?
Increasing government debt,
during a period of deflation does not really help. Budget deficits can
provide a boost to aggregate demand, if combined with positive money
Lessons for UK and US.
The lessons for the UK and US from Japan are:
Avoid Deflation at all Costs. Don't implement timid policies claiming you are frightened at the prospect of inflation.
Avoid Government debt rising for two decades.
If necessary monetary policy will have to take slack from fiscal tightening, when the time is right.
Avoid having a very strong currency when your economy is in recession and exporters are suffering.
Make sure the economy remains dynamic and productive through incentives to be more efficient.