EVENTS

Date:	Wednesday, September 17, 2008
Time:	10:30 AM -- 12:00 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

Japanese Economy Needs Urgent Reforms, Economists Say at AEI

WASHINGTON, SEPTEMBER 18, 2008--As the global economic situation worsens, Japan faces some hard political choices. At an AEI event on September 17, economist Robert Alan Feldman of Morgan Stanley Japan described Japan's economic distress and argued that the Japanese government will have to implement immediate reforms if it is to weather the storm.

GDP growth in Japan is projected to slow significantly in the next two fiscal years and imports and exports are expected to decline. With a rapidly aging population with fewer people working and declining wages, Japan's economic forecast looks bleak. These trends, Feldman explained, are compounded by a population unwilling to spend their savings because they are "fearful for their future." If these economic trends continue unchecked, Japan will be hard pressed to maintain the high living standards to which its citizens are accustomed.

Feldman suggested political and economic reforms targeted at increasing the productivity of industries and workers. These reforms would not only allow Japan to maintain its current living standards with fewer workers, he said, but they will also encourage more efficient production of food and other commodities, which will help address global shortages. Other reforms--including increases in immigration, liberalization of farmland trading, and tax reforms, to name a few--would prepare Japan to absorb changes in the global economy more easily.

The ongoing U.S. economic and financial crisis is also contributing to Japan's economic woes, according to AEI resident fellow Desmond Lachman. He called the economic outlook for the United States "the most difficult economic situation that [it] has faced probably in the last seventy years"--and he said that the series of shocks hitting the United States in the form of the housing market bust, commodity scarcity, and the credit crisis have all had direct implications for Japan.

While both Lachman and Feldman painted a dark economic picture for Japan and the world, Feldman expressed some optimism. He argued that during times of crisis, countries often implement the much-needed reforms they have ignored in halcyon economic times. He noted that "growth responds to reform" and that if the Japanese and U.S. governments can implement constructive changes, the situation will eventually improve. For the short term, however, both countries must be prepared for a rocky ride.

--JENNIFER GREGG

For video, audio, and more information about this event, visit www.aei.org/event1791/. For more information about AEI's Asian Studies program, visit www.aei.org/asia/.

For media inquiries, contact Véronique Rodman at 202-862-4870 or vrodman@aei.org.

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