A break with tradition: recession-hit Japan may seem the last place to invest in, but its attempts at reform mean there are chinks of light amid the gloom

Article Abstract:

Japan remains an attractive destination for foreign investment despite its considerable economic problems. The country has been plagued in recent years by a recession, banking crises and scandals, economic turmoil in South-East Asia and other destabilizing developments. After successfully transforming itself from an agrarian society into the second biggest economy in the world and becoming 'Asia's wealth creation success story of the 20th century,' Japan now faces the new millennium weakened by declining production, employment, income, investment and expenditure. However, despite its many economies woes, the outlook for foreign investment continues to be favorable. There are growing opportunities for overseas investors to capitalize on the country's highly priced regulated and deregulated markets. Traditional ways of doing business, which have always been disadvantageous for foreigners, are now starting to weaken.

Foreign investments, Cover Story

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Japan faces bleaker economic outlook

Article Abstract:

Prospects for Japan's economy for 1998 are far from bright, with its efforts to fully resolve its problems appearing to result in stagnation at best. The country's already lackluster economic performance is seen to deteriorate further as many more weak Japanese banks face the risk of failure. Worse, a banking sector implosion could lead to a financial sector meltdown and recession, which may lead to the flight of Japanese assets to overseas markets. Prime Minister Hashimoto's unpopularity could lead to his ouster before the Senate elections in Jul 1998, a political risk whose effects are certain to reverberate in the markets. A number of developments in the last few months of 1997, such as the decline in investment and production, the bleak outlook for exports and the crisis of confidence in its banks, have worsened the country's already dire straits.

Economic indicators

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Korea: slowly turning the corner

Article Abstract:

Korea seems likely to be among the first countries to recover from the economic turmoil currently gripping Southeast Asia. Although the market value of Korean equities have fallen by 53% and the price of US dollars in won has skyrocketed to as high as 230% in the last half of 1997, the country's economic prospects look promising. In addition to the fact that Korea does not have Thailand's problem of enormous property sector oversupply, its foreign exchange position has been improving and it is achieving considerable progress in the implementation of IMF reforms. To accelerate the recovery process, the Korean government has to pursue financial sector reform, labor market reform and chaebol (conglomerates) reform.

South Korea, Economic policy, Korea

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