Japan as deadweight

Economy: U.S. can expect little demand, and Southeast Asia little capital, from recession-prone giant.

March 10, 2001

NO HELP can be expected from Japan for reversing the U.S. economic slowdown. The once-feared Japan has been economically down for a decade and seems to be sinking back into recession.

That means the economies of Indonesia and other Southeast Asian tiger cubs, struggling to recover from their meltdown of three years ago, can hardly expect soon the level of Japanese investment to which they were previously accustomed.

It was Japan's finance minister, Kiichi Miyazawa, who created a sense of panic last Thursday by saying the nation's finances were "very near collapsing."

He apologized yesterday, saying he meant only that "Japan will face a hard time reforming its fiscal situation." But not before he had sparked a run on the yen which, coincidentally, makes Japanese products cheaper and easier to sell in the U.S. market and U.S. products harder to sell in Japan.

Thanks to its addiction to public spending to stimulate the economy, Japan has the highest public debt in the industrialized world, $5.4 trillion, compared with the $3.4 trillion for the U.S.

Japan will endure political paralysis before a parliamentary election in July, and probably after. The world needs a return to Japanese economic vitality. It is bound to come eventually, but is not just around the corner.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.