And finally, that cliff edge that Japanese trade fell off a few months ago appears to be steeper than ever.
February saw yet another record drop in Japan’s exports and imports. Exports in the month were just half the level seen a year earlier, or to be more precise crashed 49.4 per cent, while imports were down 43 per cent.
Strangely, though, economists are growing more sanguine over the prospects of the economy of the Rising Sun. That provides an interesting lesson on why recessions can be important for promoting wealth in the long term.
Much hope is pinned on China’s fiscal stimulus, with analysts hoping Japan will see a resulting pick up in exports to its big neighbour.
Perhaps more significantly, however, Japan’s exports exceeded imports for the first time in five months. Japan is back in surplus.
According to The Times: “Japanese companies, once seen as making corporate decisions at tortoise speed, have responded to collapsing international markets with a ferocity and decisiveness that few thought possible.”
The truth is, after experiencing nigh on 20 years of appalling economic performance, Japan’s industry has become more dynamic.
In short, Japan has come out of her economic wilderness with a more robust and adaptable economy.
It was a painful process. But that is why recession can bring good.
No one wants to see the rest of the world go through 20 years of economic misery. But to assume capitalism is collapsing, and that we have proof it doesn’t work after it slips into recession after years of extraordinary growth, is a tad absurd.
© Investment & Business News 2013