Japanese Economy

Presented by:Rahul Yadav (15BSP0955)Rajat Wakode (15BSP0960)Raviraj Jain (15BSP0987)Richa Sharma (15BSP0993)Rupesh Barve (15BSP1040)Sarvesh Kalan (15BSP1108)

Group Members

Rahul Yadav (15BSP0955)Rajat Wakode (15BSP0960)Raviraj Jain (15BSP0987)Richa Sharma (15BSP0993)Rupesh Barve (15BSP1040)Sarvesh Kalan (15BSP1108)

INTRODUCTION• Japanese economy is the worlds third largest

economy.• According to the International Monetary Fund, the

country's per capita GDP was 37595.18 US dollars in 2014.

• After the Second World War Japanese were devoted to rebuild the lost industrial capacities: major investments were made in electric power, coal, steel, and chemicals.

• The World's highest literacy rate and high education standards were major reasons for Japan's success after the Second World War.

Aggregate Demand

Y = C + I + G + X - M• Consumption(C)• Investment(I)• Govt. Spending(G)• Net export(X-M)

Consumption:-• Recently the Japanese government raised

consumption taxes from 5% to 8% this tax hike is the first of its kind in 17 years the last one before that was in 1997 were consumption taxes rose from 3% to 5%, and it is set to rise again in 2015 to 10% , according to BBC News.

Inflation Rate of Japan:-• Consumer prices in Japan were flat year-on-year in

September of 2015, slowing a gain of 0.2% in August. • Since May 2013 it was recorded -0.3% as the lowest,

since fuel prices fell at a faster pace while food and medical care cost eased.

• Inflation Rate in Japan averaged 3.13% from 1958 till 2015

• Most important categories in the CPI are Food (25% of total weight) and Housing (21%). Transportation and communications accounts for 14%, Culture and recreation for 11.5%.

Government Spending:-• Government Spending in Japan increased to

103489.30 JPY Billion in the second quarter of 2015 from 102978.50 JPY Billion in the first quarter of 2015.

• Government Spending in Japan averaged 75366.11 JPY Billion from 1980 till 2015, reaching an all time high of 103489.30 JPY Billion in the second quarter of 2015 and a record low of 41526.60 JPY Billion in the first quarter of 1980.

Investment:-• Japan has a high FDI because major Japanese

companies that are worth trillions are turning their investment opportunities outside Japan due to the slow growing economy their.

• In Japan, cash and deposits represent more than half of total household financial assets, whereas the equivalent figure for the U.S. and Europe is 16 percent and 30 percent, respectively. Also on of the reason Japans isn’t an ideal investment is that it has the highest wages in the world.

Net Exports:-• Export:-Exports in Japan had increased to

6417.36 JPY Billion in September from 5881.48 JPY Billion in August of 2015. Exports in Japan averaged 3158.45 JPY Billion from 1963 till 2015.

• Import:-Imports in Japan had increased to 6531.83 JPY Billion in September from 6451.14 JPY Billion in August of 2015. Imports in Japan averaged 2785.96 JPY Billion from 1963 till 2015.

Factors affecting AD• Money(monetary policies)• Taxes(fiscal policies)• Trade(trade policy) • Price

Aggregate Supply

• In economics, aggregate supply (AS) is the total supply of goods and services that firms in a national economy plan on selling during a specific time period.

• It is the total amount of goods and services that firms are willing and able to sell at a given price level in an economy.

Wages:-

• Minimum Wages in Japan increased to 780 JPY/Hour in 2015 from 764 JPY/Hour in 2014. Minimum Wages in Japan averaged 745.50 JPY/Hour from 2010 till 2015.

• Average number of Employed Person in Japan is 55990.12 Thousand from 1953 till 2015.

• Unemployment Rate in Japan averaged 2.72% from 1953 till 2015.

Cost of production:-• Japan's industrial production, manufacturing

PMI and consumer prices have risen while jobless numbers have fallen. Industrial output climbed by just 3.2% missing expectations for 3.6% growth.

Tax and Subsidies:-

Taxes paid by individuals in Japan fall under 6 categories:1. Income tax 2. Enterprise Tax3. Property Tax4. Consumption Tax5. Vehicle related Tax6. Liquor, Tobacco and Gasoline Taxes

Factors Affecting AS:-• Price• Cost• Potential Output• Technology

Business Environment:-

• In 2009, Japan recorded one of the lowest rates of entrepreneurial activity.

• Entrepreneurs face difficulties when starting their own businesses.

• Some of these difficulties are receiving loans from banks, the pressures of deflation, weak domestic demand, and tough competition within the country.

Japan’s Economic Forecast:-

• Output growth is projected to reach 0.75% in 2015 and 1.5% in 2016.

• Export growth is projected to remain buoyant.• Inflation, which has fallen close to zero, is

projected to begin rising in the second half of 2015, reaching 1½ per cent by the end of 2016.

• The unemployment will rate continues to fall.