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Essay on Macroeconomic Indicators
There continue to be signs that the Japanese economy has begun to emerge from the depths of the recession seen in 1998. There are signs of a marked turnaround in the export market in recent months. This reflects the revival of the other Asian economies that together account for nearly 40 per cent of Japanese export markets. In the three months to November export volumes were some 71/2 per cent higher than in the previous three month period, and 73/4 per cent higher than a year earlier. This has helped to stimulate industrial production. In the three months to November production rose by 11/2 per cent and was 31/4 per cent higher than in the previous year. A growth of 9 per cent in Japanese export markets is expected this year, with merchandise exports rising by 63/4 per cent.
Whilst this is likely to provide a welcome boost for many manufacturers, it is less than might be expected if the yen had not appreciated significantly last year. Net trade is projected to add around 0.2 percentage points to GDP growth this year. The overall current account surplus is projected to remain at around 21/2 per cent of GDP. The Japanese economy is being helped by the Asian recovery but economic growth of 1 per cent in 2006 will be a modest affair. The government is approaching the limits of fiscal stimulation to the economy. The government budget deficit will run at 8.5 per cent of GDP in 2006 and 8 per cent in 2007. The ratio of gross government debt to GDP will rise above that of Belgium and Italy by the end of 2006.
The impact of equity price growth on aggregate demand has acted more quickly than the impact of new technologies on domestic supply in the United States..................
