Eyewitness: Japan

Tokyo 21 November 2008

After the Second World War, Japan was left in ashes; for several decades the people worked for incredibly long hours to rebuild the country, and this finally paid off in the 1980s.

However, when the economic bubble burst in 1989, what followed in the 1990s became known as the ‘decade of loss’.

With the surge of real estate prices during the economic boom, banks and mortgage companies accelerated in huge lending activities.

But when the market started to fall unexpectedly in 1990, Japan fell into severe recession for over 10 years.

The nation became accustomed to saving rather than spending, and the savings ratio in Japan therefore became the highest in the world.

This new modest approach has certainly helped Japan recover from its economic crisis; banks paid off their debts from the bailouts in 2003 and things began to look more hopeful for many people; job intake was at its highest last year since the disaster in 1989.

So how will this particular recession in Japan affect the economy?

Japanese business people are worried, as the Nikkei share index has lost quarter of its value since the beginning of October, and half in just 12 months.

Even so, the rise of the Japanese yen compared to other currencies has caused more problems for companies than the recession itself, as Japan is an export-driven country that sells its goods in foreign currencies, this growth means that Japan will earn less.

Japan also relied heavily on exports to emerging economies such as China and India as well as the United States, which has put them at a disadvantage as all those countries are also affected by the recession.

That said, banking industries are going strong, which is great news after the difficult times in the 90s.

Although the major banks were obliged to revise their financial forecast for this financial year, they are still at an advantage in comparison to the rest of the world and have thus invested strongly in companies abroad- Merrill Lynch by Mizuho, Lehman Brothers by Nomura, Morgan Stanley by Mitsubishi UFJ to name a few.

This is an opportunity for Japan to be recognised again as a country with a strong economy, a reputation they had achieved once in the past.

As the yen is so strong right now, it also is becoming cheaper for Japanese tourist to go overseas.

And what about the Japanese people?

The truth is, many have experienced much worse.

In a country where life-long commitment to a company is part of the culture, having to admit to being a freelance worker or even jobless a decade ago could not have been more embarrassing.

But now people are accustomed to tighten their belt.

This recession in comparison is too small to be concerned with, but it has made the younger generation feel less confident with where they might find life-long employment, especially after seeing their parents lose jobs when they were growing up during the crisis.

Some young people who were expecting to be working in the new year after their graduation have just experienced getting fired before they have even started, and are now desperately trying to find jobs elsewhere instead.

And their opinion on the current economic downturn in Britain and America?

The real answer is that the majority have little sympathy for what has happened.

Firstly, Japan had no such bonus culture like in Wall Street or the City of London, even during their bubble economy in the 80s.

Secondly, many Japanese people feel that the West should have predicted the dangers and learnt lessons from what Japan went through almost two decades ago, both for the country and its people.

Mari Shibata

Tokyo