After a tumultuous year in 2011, what can we expect for the Japanese economy this year?

If everything goes smoothly, RIETI Faculty Fellow Mitsuhiro Fukao sees the Japanese economy in 2012 achieving a reasonable growth rate of about 2% in large part due to a massive reconstruction budget proposed by the Noda administration. A significant portion of the reconstruction outlays, backed by increased public expenditure and financing, is expected to be spent in the first half of 2012, leading to relatively stable growth during this period, although a slowdown to some extent may occur in the second half. If this holds true, business sentiment in Japan should gradually improve.

However, Mitsuhiro Fukao also sees the possibility of a strong downward pressure exerted on the economy with the same impact as that of the Lehman Brothers collapse-triggered global financial crisis, with Europe as the epicenter. If this occurs, the Japanese economy can expect negative growth, along with increased unemployment and worsening deflation.

In the January issue of the RIETI Report, Mitsuhiro Fukao analyzes the cause of this risk scenario. Furthermore, he discusses in detail the international competitiveness of the eurozone countries, the lingering crisis in the PIIGS countries (Portugal, Italy, Ireland, Greece, and Spain), and the possibility of a serious recession in the eurozone.

Absent any external shock, the Japanese economy in 2012 should be able to expect a reasonable growth of about 2%, owing to the relatively large reconstruction budget that the Noda administration has put forward. A major part of the reconstruction outlays, backed by increased public expenditure and financing, is expected to be spent in the first half of 2012. Therefore, the first half of the year should see relatively stable growth, which may slow down to some extent in the second half. If this scenario holds up, the business sentiment in Japan should show gradual improvement. On the other hand, caution is required, because there is a 20%-30% chance that a downward pressure equaling the impact of the global financial crisis, triggered by the collapse of Lehman Brothers, will be exerted on the economy, with Europe as its epicenter. In that case, due to a significant worsening of the environment surrounding exports, the Japanese economy is expected to experience a negative growth of about 2% from the previous year, together with increased unemployment and worsening deflation. In the rest of this column, the cause of the risk scenario is analyzed.

To read the full text
http://www.rieti.go.jp/en/columns/s12_0005.html?id=nl

RIETI Symposium

No events are scheduled at the present time.

Brown Bag Lunch Seminars

(All BBLs run 12:15 - 13:45, unless otherwise stated.)

January 26, 2012
Speaker:	HARADA Eikoh (Chairman, President & CEO, McDonald's Holdings Company (Japan), Ltd.)
Moderator:	NAKAJIMA Atsushi (Chairman, RIETI)
"Reforming the Management of McDonald's [tentative]" (in Japanese)
NOT for quotation

January 27, 2012
Speaker:	TOKUSEI Kentaro (Product Management Director Geo APAC, Google Japan)
"8 Ideas about Innovation" (in Japanese)

January 31, 2012
Speaker:	SURIN Pitsuwan (Secretary-General of ASEAN)
Moderator:	NAKATOMI Michitaka (Senior Fellow, RIETI / Principal Trade Negotiator, Trade Policy Bureau, METI)
"ASEAN and Regional Integration"

February 1, 2012
Speaker:	NISHIMURA Shuzo (Director-General, National Institute of Population and Social Security Research)
"Conditions for Medical and Nursing Care Service to Grow as an Industry" (in Japanese)

February 7, 2012
Speaker:	SAKANE Masahiro (Chairman of the Board, Komatsu Ltd.)
"Topic: TBA" (in Japanese)

February 10, 2012
Speaker:	NOGAMI Yoshiji (President, The Japan Institute of International Affairs)
"Topic: TBA" (in Japanese)

February 28, 2012
Speaker:	YAMASHITA Kazuhitoi (Senior Fellow, RIETI / Research Director, the Canon Institute for Global Studies)
"Topic: TBA" (in Japanese)

For a complete list of past and upcoming BBL Seminars, http://www.rieti.go.jp/en/events/bbl/index.html