Not so long ago Japanese manufactured goods predominated. But now, products from other countries such as South Korea are attracting attention even in India. So what happened to Japan?

Several years ago when I was on a newsgathering visit to India, a simple question posed by a local journalism researcher made me realize that the days when Japanese money flowed around the world and it was fashionable to talk about Japan as No.1 were well and truly gone. Japan's position in the world economy had changed significantly.

Japan's rapid economic growth in the wake of the Second World War was considered a miracle. However, a policy of extreme monetary easing, introduced in response to the rapid appreciation of the yen against the dollar following the Plaza Accord in 1985, triggered an economic bubble. The collapse of this bubble in the 1990s left Japan with budgetary deficits and financial institutions and companies with massive nonperforming loans. Many went bankrupt and the Japanese people suffered from the impact of restructuring as well as a very poor employment market.

Thanks to government policies requiring the injection of public funds into financial institutions and to deregulation, Japan has at last almost sorted out the problems associated with the non-performing loans-but there is still no sign of an end to the massive budget deficit. Since 2002, the country has been experiencing the longest period of economic expansion since the Second World

War, but the accompanying low growth rate has deprived the nation of any sense of economic prosperity. Japan's economy faces a difficult future, marked by increasing social inequality, a declining birth rate and an aging population that is leading to an overall fall in the population.

Meanwhile, the globalization of markets is increasing, and growth is shifting to powerful emerging economies, namely, Brazil, Russia, India and China-the so-called BRIC countries, which are well positioned for growth. That said, there is no need to be overly pessimistic. Japan is the world's second-largest economy in terms of gross domestic

product (GDP) and, if it manages a soft landing without making policy mistakes in dealing with its aging and falling population, it should be able to maintain current levels of prosperity. The Japanese, with their high level of education and a characteristic industriousness should be able to remain leading players on the international stage.

This reference book is designed for use in explaining the economic realities surrounding Japan and its potential to non-Japanese people. The content will enable readers to reply in detail to a variety of questions that they may be asked either in Japan by visitors to the country, or overseas. The information is presented in a straightforward question-and-answer format.

Should the following pages help promote a greater understanding, among people of other cultures, concerning the Japanese economy-not to mention an enhanced insight into, and respect for, Japanese culture-then the book can be considered a success.

100Q&A A English guide to the Japanese economy Part1