1. Japan- Sick Economy Presented by: Cheong Jia Ni Ho Chin Sian Lim Pei Shan Pan Hui Hui Xiao Jun Hui

2. Contents Introduction The reasons why Japan is a sick economy Will the people be affected Possible Cures for Japan’s economy

3. Why Japan is a sick economy? Prices of land for commercial use and residential use have dropped since 1991 Decrease of 70% for commercial use Decrease of 45% for residential use Interest rates to fall to a historically low level. The monetary policy in Japan was the traditional type of interest rate inducement before 1990s, The Bank of Japan has adapted a policy to increase money supply. I In 1995, the rediscount rate was stepped down and attained 0.5%. From 1999 to 2000, Japan has adopted the zero-interest policy.

4. Why Japan is a sick economy? Economic growth rate declined Economic growth rate declined Declined in steps since the early 1970s, from 10.4 percent in the 1960s to 5.2 percent in the 1970s, to 3.8 percent in the 1980s, and to 1.7 in the 1990s.Declined in steps since the early 1970s, from 10.4 percent in the 1960s to 5.2 percent in the 1970s, to 3.8 percent in the 1980s, and to 1.7 in the 1990s. (Figure) (Figure) Change in work attitude Change in work attitude 22% in 1975 22% in 1975 16% in 1992 16% in 1992 (Next)

6. Will the people be affected? Yes, to a large extent… Economy keeps shrinking Economy keeps shrinking Consumer spending decreased Consumer spending decreased Interest rate Interest rate Stock market fell Stock market fell Unemployment Unemployment Government run out of money Government run out of money

7. No, because Japanese… did not invest in stock market did not invest in real estate properties do not risk losing their jobs have more money and time to travel around the world Will the people be affected?

8. Possible Cures for Japan’s economy Changes in corporate taxation Promotion of new industries Changes corporate pension systems Changes corporate pension systems Changes in commercial law Changes in commercial law

9. Possible Cures for Japan’s economy Inflation Receiving much media attention as a miracle cure to drag Japan out of deflation Expectations for inflation increase, nominal interest rates rise, increasing the cost of issuing new bonds. Bring positive effects by reducing the burden of government debts Government will be able to achieve the same debt reduction effect as a tax hike without using the term "tax hike" (and even without bothering to collect taxes).

10. Possible Cures for Japan’s economy Inflation: Problems Labour costs are bound to go up, the jobless rate is expected to increase A decrease in the value of money due to inflation will lower pensioners' living standards The price of outstanding bonds will fall Unclear who is going to take responsibility if inflation becomes uncontrollable Savers faced with negative real interest rates, are likely to plunk their cash overseas, causing a slowdown in monetary growth and credit creation.

11. Though Japan is still a sick economy, the government of Japan already had certain policies which can solve the problem. Due to some obstructions such as the working attitude of the Japanese, Japan is unable to drive off the sick economy. However, we strongly believe that Japan economy will be growing in near future… Conclusion