Unemployment rate increased by 2 %: Lack of demand for 20 years

(Oita Godo Newspaper, July 23^th 2010, Evening Paper, Page 1)

Mr. Arai, the overall representative of Economic agency, said on the 23th cabinet meeting, that according to the 2010 economical report ( Economical white paper), from 1990 to today, about 20 years, among developed countries, Japan is experiencing a slow decrease of demand.

The decrease demand have connection with the unemployment rate, it is said to be the settlement of the remains of the economic bubble bursting, showing that will hardly be any economic growth in the future.

After the bubble burst, there is a period that the demand is less than the supply, and it resulted in a supply gap, "If done so, it will not be reflected as a developed country".  The unemployment rate is proportional to the demand decrease and is linked, if the supply and demand are averaged, in 2009, the unemployment rate is 3%. In the actual unemployment rate, 5.1%, 2% is because of decrease in demand.

The Democratic Party's first white paper, President Kan mentions this as an urgent problem. The problems are deflation and decrease in demand. Nursing and medical, environment sections are sectors that could be use to create value, if the prices continue to drop, it will a structure for deflation, and said that Japan must try to escape from this plight.

The government have announced that in 2009 November that the deflation, till 2006 July have already continued for 5 years and 3 months, stating that consumers buy cheaper things.        

Decrease of price, the price of products goes down and that in this 1 year, it drop from 30 % to 60 %.

Comments

I think that the price in Japan is very high, being a student with not much income, it is hard for me. But if deflation continues it will be harmful to economy. According to reports, China has overtaken Japan and Japan is currently the third largest economy behind China.

I think Japan have to think of new strategies so as to keep up with the competition that other countries provide and to cope with its aging population.

Tay Zhong Jie Edwin

Singapore

Ritsumeikan Asia Pacific University, APM 4