An Analysis of Japan’s Recent Economic Crisis: Lessons for Bangladesh

Abstract

Japan has experienced rapid growth during 1960-69, around 10.9%, whereas it started the development process from almost ‘zero’ after WWII. Since the independence of Bangladesh, the country has received a significant amount of contribution from Japan in various sectors. Japan is facing stagnation for over two decades. The economy started crippling with the collapse of stock and land prices in the mid-1980s through Bubble Economy. It slipped further due to the global financial crisis of 2008, which led to recession and deflation. For the last two decades, Bangladesh is also approaching a stable growth, around 6.5% per year, and has the ambition to achieve around 8% in the 8th five-year plan. Therefore, the study’s main objective is to explore why Japan cannot increase its inflation rate at its expectable level and its way out and to find out what sorts of policy Bangladesh should take for avoiding the Japanese type of economic crisis. The study applied qualitative methodology depending on Desktop/Secondary source-based research where available documents were reviewed critically. The findings indicate that Japan had tried to raise inflation by 2% through three arrows which are popularly known as Abenomics which are quantitative and qualitative monetary easing (QQE), fiscal expansion and structural reform. This policy failed since it did not consider the context of Japan. With an increasingly ageing population and decreasing population growth rate, Japan has a unique and distinguished demographic structure that affects the supply and demand side of the economy. Therefore, Bangladesh should not adopt any economic policy without considering its very own unique characteristics.