Question

Discuss strengths and weaknesses of the Japanese economy.

Answer 1

There are different strengths and weaknesses of the Japanese economy. The first strength is its an export oriented economy that has its international trade agreements with all the major nations as well as getting entry into the new markets. The second strengths is the high level of savings rate that is 23%. It makes a robust market of loanable funds and funds are always available for the investments. It also drives interest rate to be lower in the Japanese economy. The third strength is the debt taken up by the government is owned by the local investors. It means that interest paid by the government does not go outside the country and makes Japanese people to be more rich. Besides, Japan produces goods that are at the high end of technology and diversified products to support its export. It also works as a strength.

Though, there are some weaknesses also. The first weakness is the persistence of deflationary pressure in the economy that is not eliminated by the government. Inflation rates remain very low than the target rate of Bank of Japan. The second weakness is the ageing population and continuous reduction in the work force. It has become a challenge for the government. The third weakness is the lower productivity level by the SMEs present in the country of Japan. It is due to the poor demand. As a result, the economy is not expanding and GDP growth rate is very low.