Japan-Economic+Issues

Japan’s economic issues as reported by the economist Ruling Party: Liberal Democratic Party Resigned Finance Minister: Shoichi Nakagawa- Forced to resign after apparent “drunkenness” (which he blamed on cold medicine) at a G7 Press Conference in Rome on Feb. 14, 2009. Current Finance Minister: Kaoru Yosano, the economics minister, who added the finance ministry to his business card after Mr Nakagawa’s departure. Yosano said, “We are facing the biggest economic crisis since the second world war.” Stimulus Package: ¥12.6 trillion (around $150 billion) Only a quarter has been implemented thus far. Part of the hold-up is caused by a plan for ¥2 trillion in cash handouts to individuals, which has little public support and is rejected by the main opposition, the Democratic Party of Japan (DPJ). The prime minister, Taro Aso, Mr Yosano and the LDP’s leadership have in private agreed on an even bigger package, of as much as ¥30 trillion, which they plan to unveil after the 2009 budget passes the Diet (parliament) Other information · The Japanese economy contracted 3.3% in the final quarter of 2008, the third consecutive fall, mostly due to a collapse in overseas demand compounded by a strong yen. Economists forecast a drop of around 4% in 2009—a contraction twice as severe as in America and Europe. · Corporate profits have collapsed—down 89% on last year. Big manufacturers’ output is down by 20-40%. Toyota has halved its output. Bellwether companies from NEC to Nissan have slashed jobs and investment. Industrial output is expected to fall to levels not seen since the 1980s · Some investment, such as building a new runway and terminal at Haneda, the airport closest to Tokyo, to make it a proper international one, will raise productive growth. · The LDP has been in power for all but 11 months since 1955, but Mr Aso governs with approval ratings that some polls place at less than 10%. The DPJ is expected to trounce the LDP at the general election Mr Aso must call by September. But the DPJ has even less of a clue about how to tackle the economic mess. It will toast victory with cold medicine, but inherit a hangover.