Japanese economy suffers against the background of US-China trade war

Tokyo: The Japanese economy has sustained a massive blow due to the raging US-China trade war, with a 2.5% decrease seen in growth rate during the quarter of July-September. It is said that this is the biggest downslide since 2014. Analysts claim that the indications of a global recession have further strengthened due to this blow to the Japanese economy. Before the downslide of Japan, similar blows to the economies of China, Australia, the UK and some European countries had also been recorded.

The Japanese economy had shown positive trends after the implementation of the “Three Arrows” strategy by Prime Minister, Shinzo Abe, since past two years. There was rapid growth in the Japanese economy in consecutive 8 quarters, from the beginning of 2016 to the end of 2017. This progress came to be known as the highest milestone of economic development in the last 3 decades. Although it had suffered a setback in the first three months of 2018, the Japanese economy managed to achieve a growth rate of 0.7% in the April-June quarter, thus indicating that it was bouncing back to its previous level. However, the data of the July-September quarter indicates that the economy has suffered a blow once again. It has been revealed that the intensifying US-China trade war is one of the major causative factors behind this downslide. China, as well as the US, are leading trade partners of Japan with a combined share of more than 36% in the entire Japanese trade. The taxes levied by China and the US on their mutual imports has proven to be an ordeal for Japanese companies.

The Japanese companies are now exercising extreme caution in their investments and have also adopted a policy of reducing expenditure. Thus, in the quarter of July-September, a whopping decline of 2.8% was seen in capital expenditure which comprises a huge part of the GDP. Subsequently, the spending from the Japanese public has also shown a decline of 0.2% with a 0.5% decline in domestic demand. Japanese sources have indicated that these three factors have primarily contributed to the huge decline seen in the economic growth rate.

Analysts have claimed that this downfall in the Japanese economy could be a part of the potential global recession that is foreseen due to the US-China trade war. The leading economies of Australia, China and the UK had also indicated negative trends before the Japanese downslide. It had been recently declared that the growth rate of UK’s economy had fallen by 0.4% in the quarter that ended in October. Analysts have also indicated that all is not well in the leading economies of the European Union like France and Germany and there is also a downslide in the “Eurozone” economy.

In the meanwhile, there is a steep rise in gold prices, having reached the mark of USD 1250 per ounce (28.34 gms). This rise in gold prices which is the highest as seen in the last 5 months is a result of the declining value of the US dollar.