Japan’s political watershed and its economic challenges

Japanese businessmen pray for good business at the Kanda shrine on January 4, 2010 in Tokyo, Japan. (Photo: Reuters)

Author: Akira Kojima

Last year was a politically exciting but economically depressing year for Japan. It was the first time in 16 years that the government had been led by a party other than the Liberal Democratic Party (LDP), but also a year in which Japan suffered its largest decline in GDP in half a century. The year 2010 is to be another difficult and challenging year, with economic deflation necessitating the adoption of a new growth strategy and a July upper-house election which could create a historical watershed of Japan’s politics.

While Japan was not at the epicenter of the global financial crisis, with Japanese banks having better balance sheets and much less exposure to toxic financial commodities, the ensuing collapse in export demand and financial spillovers have plunged Japan’s economy into its severest recession in many decades. Read more…

New Zealand: domestic disappointment and international success

New Zealand's Finance Minister Bill English (R) smiles at his Prime Minister John Key after he delivered the national budget in Parliament in Wellington, on May 28, 2009. (Photo: New Zealand Business Politics)

Author: Gary Hawke, NZIER

New Zealand marked time in 2009, with the government conserving its political capital but achieved little.

Much of the agenda was international rather than domestic. This was most obvious in the area of climate change. New Zealand shares the international policy issue of identifying a suitable response to a risk assessment and choice of appropriate insurance policy, but there was also much emotional nonsense. Read more…

Singapore weathers the crisis and prepares for a stronger year

A woman wears a headscarf while visiting the waterfront at Singapore's business district on Monday Jan. 4, 2010. (Photo: AP Photo)

Author: Siow Yue Chia, Singapore Institute of International Affairs

The story on Singapore in 2009 has been that of a vulnerable small and open economy overcoming the fallout from the global financial crisis with sound economic and financial fundamentals, good governance and a timely stimulus package.

The exposure of Singaporean financial institutions to failed and distressed institutions in the US and Europe was not significant and did not pose any systemic risks to Singapore’s economy, as local financial institutions were well capitalised and remained resilient. Read more…

Predicting the performance of the Chinese economy – Weekly editorial

Author: Peter Drysdale

The Chinese economy is leading the rest of the East Asian, if not the world, economy out of the global financial crisis. The strong performance of Australia and Korea through the crisis, and the recent signs of recovery from the sharpest drop in Japan’s GDP for over half a century, all owe something to how well China has come through the crisis.

In this week’s lead, Yiping Huang chances his arm on what the fortunes of the Chinese economy might be over the coming year. Like Huang, a number of analysts of the Chinese economy who have contributed to the commentary on this site over the past year and a half, foretold the rapid rebound. There were two main reasons for this. The first, which Huang cites, was the Chinese government’s ability to mobilise resources from a strong fiscal base and direct them to a massive stimulus program. Read more…

Five predictions for the Chinese economy in 2010

An investor looks at the stock price monitor at a private securities company on Monday, Jan. 4, 20120 in Shanghai, China. (Photo: AP Photo)

Author: Yiping Huang, Peking University and ANU

As the year 2009 fades into the distance in the rear view mirror, the Chinese economy has entered into unknown territory in 2010. Investors are universally far more upbeat than one year ago. Policymakers talk busily about adjusting economic structure as the new top policy priority, seeing no risk in achieving above 8 per cent growth.

For some, China’s ability to achieve strong growth amid global recession was the biggest surprise of 2009. To me, it was not. The Chinese government’s abilities in mobilising resources have strengthened, not weakened, significantly during the past decade. If the government really believed that 8 per cent growth was critical, then that would happen. Read more…

A sluggish recovery expected for Malaysia’s economy

Malaysian Prime Minister and Finance Minister Najib Razak unveils Malaysia's 2010 budget at Parliament house in Kuala Lumpur, Malaysia, on Friday, October. 23, 2009. (Photo: AP Photo)

Author: Foong Kee Kuan, MIER

In Malaysia the doom and gloom of the global financial crisis was pervasive at the start of this year, but gradually gave way to increasing optimism following the leadership change in April. Currently, various economic indicators forecast continued improvement for Malaysia, albeit subject to occasional pullbacks, and this economic progress is due to the efforts of the Malaysian government’s introduction of policies aimed to stabilise the economy.

Economic activity rebounded in the second quarter of 2009, after bottoming out in the first quarter, with stabilising domestic and external conditions leading to further improvement in the third quarter. Sentiments among businesses and consumers also recovered, leading to more private investment and consumption along the way, with the rate of decline in inflation also slowing in October.

The Malaysia government’s response to the global downturn has been to introduce a raft of national stabilisation measures, to varying degrees of effectiveness. Read more…

Papua New Guinea’s development success depends on learning from its past

Port Moresby, the capital of Papua New Guinea (Photo: AFP)

Author: Aaron Batten, Ministry of Finance, Malawi

The PNG economy continued to perform well in 2009. Despite declines in the oil and gas sector, lower commodity prices, and reduced international demand because of the global financial crisis, real GDP grew by a solid 4.5 per cent. This growth was also relatively diversified with a 4 per cent increase in formal non-mining sector jobs adding further to the large employment gains made since 2005.

The government’s management of the economic expansion has been mixed, however. The fiscal surpluses of previous years have eroded, with this year’s budget recording a 0.4 per cent of GDP deficit after a 2.2 per cent of GDP deficit in 2008. Read more…