Japan’s Economy is still Dull

Japan is trying a futile effort to hold on, being the second world biggest economy against China. From 1.1% growth in 2009, it is expected to grow by 4.6% of the GDP in 2010. Ironically, it is due to the increase of export to China, its biggest trading partner. However, despite of this hype, China is expected to overtake Japan's US $ 5.27 trillion GDP for the second place. China's present GDP is US$ 4.9 trillion. US GDP, who is at the top place, is US $ 14 trillion.

US economy grew by 5.7% of its GDP, while the Euro Zone economy rose by 0.1% for the said last quarter of 2009.
The problem of Japan now is deflation, in contrast to inflation problem of China. The Japanese Government officials are trying to paint a rosy picture of the economy but data remains dull and flat.

Many are wondering how the Japan's policy makers can achieve high growth and ability to pump-prime the economy, when its central bank has exhausted its conventional option to raise funds.

Economists advised policies in response to deflationary tendencies of the economy must be the concern of Bank of Japan. The new government is shifting focus from public works spending to assistance to households spending. However, many opined that the effect of this on the economy is not immediate. However, this is viewed as remedy for deflation.

Japanese economic growth has been sluggish, since an economic bubble burst in 1990. Recently, the growth in exports has been buoyed by a recovery of China and the rest of Asia- as well as a weaker yen in recent months.

China's economy is likely to eclipse Japan's in 2010, though Japan's income per capita remains significantly higher than that of its giant neighbor. After 30 years of rapid economic growth, China's economy is about to surpass Japan's.

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