Columbia Senior Professor Hugh Patrick’s Annual Essay on the Japanese Economy

Japan now again seems to be breaking out of the doldrums it has been in since the early 1990s. Even though the daily news makes one wonder, I retain my optimism and faith, based on some six decades of studying Japan and watching it grow and evolve. I have addressed this theme in previous essays, and despite the subsequent ups and downs, I believe it applies today.

Deflation is well on the way to being brought to an end, but growth has been erratic. GDP declined by 0.9 percent in fiscal 2014 (ending March 31, 2015) because of the recession in the first two quarters, but finished strong, with substantial increases in the last two quarters. Recovery this year was jolted by a bad March–June quarter with a decline of 1.2 percent, and what now appears a tepid and uncertain recovery, and a flat and possibly negative summer quarter. Nevertheless, projections are that Japan will achieve reasonably good growth for the next two years. After that, much depends on the adverse demand effects of the scheduled further consumption tax increase to 10 percent in April 2017, and indeed whether that takes place.

The next two sections are a brief review of the economy and the international context. I then take up various aspects of Abenomics, including longer-run growth prospects, corporate governance, and Japan’s energy sector, focusing on electricity…

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Professor Patrick’s background:

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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