Cadet Killian Buckley's Blog

Japan is official, due to the decline in its economy for two straight quarters, in a recession. There are fears that the recession will only continue and there is a stimulus package in the works.  This bad news for Japan could foretell disaster in the region due to the prominent role Japan plays in the regional economy.  The recession is most likely not going to impact the economy of the United States.  In fact, it will more than likely be a plus for US consumers due to the fact that as the Yen, Japan’s currency, decreases in value, Japanese goods will become cheaper and cheaper for them to consume.

While Japan’s recession might not impact its Western economic partners negatively, it could have a negative impact in the region.  Japan consistently has one of the strongest economies in the region.  However, their strong economy has overtime made Japanese goods more expensive to produce and the value of the Yen has increased due to its strong economic ties with Western nations such as the United States.  Since the value of the Yen has decreased, the price of Japanese exports has decreased and, therefore, making the export competition between the East Asian nations even tougher.  Nations like South Korea are struggling to export goods at the low price of the Yen.     The nations within the regions, many of whom have strong export economies, can not afford to export their goods at the cost that Japan can now do so due to their economic recession.  This may cause economic instability in the region and lead to a recession that could spread to other East Asian nations.