It seems that in many ways, Japan’s economy has gone back over time.
Inflation and wages increase mostly where they were in the early 1990s, just before the price reduction and the spiral of economic stagnation, which became known as the “lost decades”.
On Friday, the Bank of Japan indicated to increase interest rates to a quarter point, up to 0.5 %, another step in its axis away from ultra -rate officials, which has long been a shock to the economy. He tried to give.
Friday’s rise, which has been brought to their highest levels since 2008For, for, for, for,. The third was the third, which was not seen in Japan since 1989. President Trump’s markets will be blurred.
Since other major central banks have shifted to reduce high interest rates to prevent inflation, Japan, as usual, is moving the trend. After encouraging the rising price period, the Bank of Japan is currently increasing the rate of more than zero.
Economists say that with the return of inflation and positive interest rates, Japan is starting to resemble more traditional economy.
Defitional mindset-why buy something today when it is cheaper tomorrow. Increasing interest rates usually cools the economy by making borrowing more expensive, but economists suggest that in Japan’s case, tightening financial policy can help in the long run. High rates can keep up with “zombie” companies with cheap borrowers of years and make more growth -based businesses that are in a better position to take advantage of Japan’s limited labor supply.
“There were many areas of disqualification and inflation is brought to them openly due to inflation,” said Japan’s chief economist, Japan’s chief economist, Japan’s chief economist. The increase in interest rates was in some ways such as “opening the Pandora’s box,” he said, “But eventually we believe that Japan will remain with a new, more productive economic growth.”
For now, though, these are not just inflation, base salaries and stock prices that have returned in the early 1990s. Japan is suffering from a overall economy that has grown very little over the past three decades. In 2024, Japan’s gross domestic products, which have been adjusted for inflation, are expected to increase by almost a quarter since 1994, while in the United States, the economy is more than doubled in size during the same period.
In Japan, inflation began to cool down in the early 1990s after the elimination of a lot of real estate and stock market bubbles. By the end of the 1990s, Japan was fully developed, a wide and permanent reduction in the general price of goods and services, which delays business and consumers huge investment and purchase.
To try to pull Japan through this cycle of prices, wages and costs, the Bank of Japan began buying more government bonds and corporate loans – flood markets that could be spent in the flood markets. In 1999, the Central Bank adopted a zero interest rate policy, and in 2016, it took a step further by imposing negative interest rates. But even these unconventional tactics did very little to promote economic activity.
In the past few years, since the supply of pandemic diseases and the geographical political shock has increased worldwide prices, officials in Japan have the opportunity to convert import costs into lasting inflation.
Instead of raising rates to raise prices like the Federal Reserve and practically every major central bank in the world, Japan was determined at its extreme rates. In hopes of producing a spiral of rising salaries and inflation, officials encouraged companies to increase import prices and increase wages for employees.
It seems that the bicycle is kicking in gear. Until the past month, inflation in Japan is beyond the Bank of Japan’s 2 % target for 33 months, which has increased the basic prices of consumers by 3 % in December. In recent months, the salary has intensified to a new extent since the 1990s. During the labor talks in the spring last year, known as Shinto, Japan’s largest business group agreed to increase the largest wage since 1991.
“Inflation, eventually, has to be included in the economy,” Society Ginwral wrote in a recent report. The French bank announced, “In more than two years, Japan has put three decades of utility behind it.”
Nevertheless, a major concern is that reflecting Japan’s economy will help the country remove it from its long -standing economic growth. Japan’s population is declining, production capacity remains, and it is not yet clear whether wages are increasing to increase costs to facing more prices.
Since inflation has increased wages in the last three years, the spending in Japan has been relatively weak. Private consumption – which forms most of Japan’s overall domestic product – it was chosen in recent circles, but it was after a long rise, which was spread over the last four circles.
International Monetary Fund estimated a Report This month, Japan’s economy fell 0.2 % in 2024. It predicted a 1.1 percent increase for the country this year – which predicts its 1 percent increase for Europe, but is less than expected to increase by 2.7 percent in the United States. States.
Although labor negotiations in the spring of this year are likely to repeat the benefits of record salaries in previous years, recent data shows that Japan’s largest companies increase the heading of the “Economy in the past I do not translate wages improvement. ” , Japan Economics Head in Moody Analytics.
Mr Ingrak said, “The wage hike is lacking,” he said, “Combined with sticky inflation,” suggests that the domestic budget will also be pressured in the early 2025. “
