Prediction on Economies of Europe and Japan
The prediction on Europe and Japan’s economies regarding slow growth and recovery after the recession is true. These robust economic powers have had a hard time in recovering their economies. They have faced many structural problems including deflation in the intervening period. Banks have been reluctant to lend (Sinha & Labi, 2011). As a result, many businesses have not been able to operate. This has affected the production of export goods. The decline in the global economy after many countries, including Germany and Hong Kong, went into recession has adversely affected these two supreme powers whose economy is boosted by the strength of their exports growth.
More so, Japan and Europe are dependent on sales to the United States, which is the world’s largest economy (Mead, 2014). It is worth mentioning that the US is also struggling to build back its economy after the recession. This explains why the U.S. is not able to make as much sales to these two supreme powers as it used to (Sinha & Labi, 2011). Domestic consumption has weakened due to job loss, wage cut, and high rate of unemployment. Many smaller companies have gone bankrupt due to declining exports. Accordingly, the import cost has also gone up due to low inflation (Gordon, 2012).
However, according to a Japanese economist, Mr. Kumano, Japan’s economy is rising gradually. Its Central Bank has cut down its lending rate, consequently enabling borrowers to pay low interest rates. Nevertheless, as the economy of the U.S. stabilizes, so does the Japan’s and the Europe’s economy (Top 10 Economic Predictions for 2010, n.d.). However, the growth is slow. Many small companies are opening up and hence the unemployment rate is going down. More so, as predicted, the economic growth and recovery has been slow but the two supreme powers are on the track to recovery and growth.
Gordon, R. J. (2012). Is US economic growth over? Faltering innovation confronts the six headwinds (No. w18315). National Bureau of Economic Research.
Mead, W. R. (2014). The return of geopolitics: The revenge of the revisionist powers. Foreign Aff., 93, p. 69.
Sinha, K. C., & Labi, S. (2011). Transportation decision making: Principles of project evaluation and programming. Hoboken, NJ: John Wiley & Sons, Inc.
Top 10 Economic Predictions for 2010
. (n.d.). Retrieved from https://www.youtube.com/watch?v=0ZrZoctURqc&feature=related