According to Record Japan trade deficit highlights risk economic stumble by
Tetsushi Kajimoto and Stanley White, Japan has a trade deficit of 2.79 trillion
yen ($27.3 billion). Although exports increased by 9.5% in January, import
costs for Japan are relatively higher. The government is planning to raise taxes
in April to help get out of this slump. However, the Bank of Japan has opted
out of using monetary measures to help with this current crisis. The Bank of
Japan predicts the economy will recover on its own shortly. They are hoping to
see Japan’s inflation rate reach 2% before they take any action. Currently
Japan is in a stagnate position. Exports, consumption, and investment are not
doing well. Consumers and businesses are waiting for the economy to change
before they spend any money.
The trade deficit will get worse before it gets better. Due to the announcement that sales tax will increase from 5% to 8% in April, consumption will increase in the short amount of time before sales tax increases. This will increase the demand for imports before the tax increase, but afterwards the demand for imports should begin to slow.
ReplyDeleteI am in agreement with Matt. Since the central bank in Japan announced tax increase in April, we should expect consumption to increase now then later. High taxes means that firms will increase their price on goods and service to pay for these taxes. Also, since consumption is expected to increase due to tax increase in April, firm will increase their price on goods and services to make more profit now since there is such high demand of their goods and services.
ReplyDeleteThe monetary policy of Japan is right, so deflation is recovered and maybe we can achieve 2% inflation. Japan does not have any resourses, so exporting is most important things to make money for importing resourses. As the article says, the exporting rate increased by about 10 %. This signal is very good for Japanese economy.Howver I am also wondering if increased tax is good for people and goverment.
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