Blog
Japanese unemployment rises to record high
29th August 2009
Japan may have edged out of technical recession in recent weeks but deflationary pressures continue to bear down on their economy.
Unemployment has just risen to a record high and CPI inflation remains firmly in negative territory - both factors threaten to bring about a deflationary spiral in which expectations of further price declines so undermine components of aggregate demand that businesses cut prices to below cost and cover their losses by slashing jobs and wages, making consumers even less willing to spend.
The Bank of Japan has for many years operated a quasi-zero interest rate policy along with periodic quantitative easing. Will they have to step in once more to boost demand if the deflation gets worse?
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.