Kevin Rafferty: Inviting Economic Suicide?
The International Monetary Fund has just reported that India has overtaken Japan as the world's third biggest economy in purchasing power parity (PPP), the measure of the amount of money needed to purchase the same goods and services. Now it is at least semi-official: Japan's economy is on the skids. A report just released by a yjink tank of the Nipppn Keidanren, the country's most powerful business organization, says that by 2050, Japan will no longer be a developed country, predicting years of negative growth from 2030 onward. "Unless something is done, we are afraid that Japan will fall out of the league of advanced nations and again become a tiny country in the Far East," says the report in Japanese by the 21st Century Public Policy Institute (21st CPPI), the research institute of Keidanren. The report should serve as a wake-up call to Japan's economic and political establishment to take radical remedial reforms. The worry must be that there are few people inside Japan Inc, who have a clue about how to remedy the situation, still less the necessary political clout. The 21st CPPI predicts that in the best-case scenario, Japan's gross domestic product in 2050 will only be one-sixth of China's and one third of India's, as the country struggles to stay ahead of Brazil as the world's fourth biggest economy. If Japan does not take remedial measures, it will drop to ninth place in the world, behind France and barely ahead of Indonesia. According to the IMF, the European Union has the largest GDP, worth $15.8 trillion, followed by the United States with $15 trillion. China with $11.3 trillion, and India now narrowly ahead of Japan, with $4.44 trillion. In per capita terms, of course, the US and Japan are far ahead of the two Asian giants: US (sixth in the world) $48,387, Japan (24th), $34,740, China (92nd), $8,382, India (129th), $3,694 (all in PPP).