The Japanese are going through an immense economic+political transformation with a collapse in the export sector in a much globalized version of recession and the more radical promises of the political parties such as increased spending on military and tougher stances on territorial disputes with neighbors which worries China.Till date, Japan's involvement in global politics, at least since the world war 2, has been only to the extent of summits which has helped Japan in promoting a soft image of itself as a global producer for many established brands. Such as portrayal did not only contribute to Japan's growth, but it benefited the entire region including China and the Koreas.
Shifts in paradigm can have some serious repercussions for Japan and in fact it has started to face some.
Shifts in paradigm can have some serious repercussions for Japan and in fact it has started to face some.
Japan recorded a Government Budget deficit equal to 9.70 percent of the country's Gross Domestic Product in 2011. Historically, from 1960 until 2011, the Japanese government budget averaged -2.7% of GDP reaching an all time high in 1961 of 2.6% of GDP and an all time low of -10.5% of GDP in 2009.
The Japanese finance ministry reported a 549 billion yen trade deficit in Nov. 2012, higher than expected. The major cause of this decline is due to the territorial spat over islands between China and Japan which has in turn impacted the shipments to China, Japan's largest export market. The Chinese have initiated a strict boycott of Japanese products which has not only impacted Japanese exports to China but Japanese manufacturers who run facilities in China to meet consumer demands around the globe.
A weak Japanese yen is not strenuous enough to make Japanese exports competitive in international markets as it is still higher than what it was five years ago, hurting exporters' profits.
Who benefits? Using a macro lens, it's a lose-lose situation for all the stakeholders and it is just like adding fuel to fire (further exacerbating the economic crisis). Using the micro-lens, South Korea seems to be the winner in the short run. Its giants are improvising their products, both automobiles and electronics, and capturing market share in world markets.
It can't be said that the Japanese are in a recession, unless officially announced. However, the facts and figures do not show a progressive image either.
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