Japan weathers the economic storm
The global credit crunch has made it to the Far East, even to the emerging economic power house that is China.
But in Japan it’s a more complex story. Its economy is highly dependent on exports, so the global slowdown is hitting industries such as mechanical engineering.
Car maker Toyota has recently announced a plunge in earnings by more than a half.
“The impact from the yen valuation against the US dollar and lower sales in the US and European markets became factors contributing to the loss of earnings,” Mitsuo Kinoshita said, Director and Member of the Board of Toyota Motor Corporation.
But some pundits say that the Japanese economy as a whole is dealing with the crisis much better than other countries.
Ed Rogers, the CEO of Rogers Investment Advisers Y.K., first came to Japan more than 20 years ago. He was in the country during the Asian financial and mortgage crisis of the late 90s. He says that geographically and politically, Japan is well placed to deal with the problem.
“They have physical connections, geographic connections to Asia which are very helpful as far as sourcing cheap goods and being close to the markets”, he said.
“The areas that are suffering are obviously exports that are focused more on the US and Europe,” he added.
While the U.S. government tries to deal with the recession, Japanese companies are taking advantage of buying up cheap stakes in ailing American companies.
Mitsubushi Financial Group bought more than a fifth of banking giant Morgan Stanley.
Ed Rogers says: “Now is a great time to be looking for bargains globally, and that's what the Japanese are in a position to do, the Chinese and the Russians are in a position to do. Anybody who has capital, either at a government or individual level can do it”.
So far, ordinary Japanese people haven’t suffered much in the global credit crisis. They do not fear for their jobs. For them, this is evidence that their government knows hot to handle the biggest global recession in years.
However, not everyone on the streets of Tokyo is optimistic. Those involved in the financial sector are beginning to feel the pinch.
They’ll be closely monitoring the the weekend’s G20 meeting in Washington.