Japan’s consumer price index fell 1.1% in May. According to the AP, that is a record drop.
The Japan of 2009 is starting to look like the Japan of the 1990s when real estate prices and the stock market collapsed. It took almost a decade for the nation to get its economy back into shape and the value of equities has never fully recovered.
Demand for Japanese exports is low and bound to stay that way until the economies in the US and EU recover. That is not likely to happen, at least in a robust fashion, anytime soon. And, Japan does not have a stimulus package like the one in China, to help push up consumer demand within its borders.
Japan is not the world’s second largest economy as measured by GDP. At $4.8 billion a year, it is barely ahead of China at $4.4 billion. A year or two of deflation will change that ranking very quickly.
Douglas A. McIntyre
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