[Nikkei Asia] Consumer Fears Entrap Struggling Japanese Economy

The lack of a solution to the BOP crisis in Japan has exacerbated the 

collapse of the fragile Asian tiger economy

April 4th, 1998 - TOKYO


With the yen’s value depreciating rapidly as part of the bursting of the asset bubble, and inaction following 

this, has expedited the decline of the once great Japanese trade economy. The yen has dropped a further 

13.2% since the previous update by the Japanese Central Bank on February 15 this year, and overall 

(foreign and domestic) investment has fell by a staggering 7.9% in the past 2 months. Consumers fear the 

Japanese economy, and this has led to a bewildering amount of retrenchment and bankruptcies in Japan, 

with unsustainable loans no longer repayable. 


With no hope for an adjustment of exchange/interest rates nor any changes in trade policy to manage 

imports and exports, the balance of payments crisis is only likely to worsen, furthering the already dismal 

level of investment in Japan. Soon, private debt-to-GDP levels will rise to unsustainable heights, and 

Japan might be yet another nation consumed by the whirlpool that is the Asian Financial Crisis.

Location: Tokyo, Japan

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