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Japan's
industrialized, free-market economy is the second-largest in the
world after the United States in terms of international purchasing
power. Its economy is highly efficient and competitive in areas
linked to international trade, but productivity is far lower in
areas such as agriculture, distribution, and services. After achieving
one of the highest economic growth rates in the world from the 1960s
through the 1980s, the Japanese economy slowed dramatically in the
early 1990s, when the "bubble economy" collapsed. Its
reservoir of industrial leadership and technicians, well-educated
and industrious work force, high savings and investment rates, and
intensive promotion of industrial development and foreign trade
have produced a mature industrial economy. Japan has few natural
resources, and trade helps it earn the foreign exchange needed to
purchase raw materials for its economy.
While
Japan's long-term economic prospects are considered good, Japan
is currently in its worst recession since World War II. Plummeting
stock and real estate prices marked the end of the "bubble
economy" of the late 1980s. The impact of the Asian financial
crisis also has been substantial. Real GDP in Japan grew at an average
of roughly 1% yearly between 1991-98, compared to growth in the
1980s of about 4% per year. Growth in Japan in this decade has been
slower than growth in other major industrial nations. The Government
of Japan has forecast growth in Japan fiscal year 2001 at 1.7%.
A number of economic indicators remain in negative territory, and
growth for first quarter 2001 was -0.2%.
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