The last hour Japan hosted the Group of 7in 2008, contagion gripped the U.S. mortgage market and spiraling food and ga expenses posed inflation dangers to the global economy.
A lot has changed since then, with much of the G-7 now on guard against deflation, and more than Japan three years into an ambitious program to spurring higher costs and energize an economy that lost its No. 2 ranking to China.
The success of Japans revival endeavour is far from certain, and the nation had to suffer a tsunami, nuclear meltdown and a operate of four prime ministers and eight ministers of finance before getting a government that was stable enough to try something new.
The G-7, which was in fact the G-8 the last hour it came to Japan, has had its own share of commotion, and in 2014 Russia was forced out over its annexation of Crimea. On May 20 and 21, G-7 finance ministers and central bank chiefs collect at a hot springs resort on the outskirts of Sendai , northern Japan, and a week later leaders fly in for summit in Mie, in the countrys southwest.
As the chart proves, Japans economy stagnated over the past eight years, while Chinas boomed, more than doubling in size. Even so, China is still outside the G-7 club, which is comprised of the U.S ., Japan, Germany, France, Canada, Italy and the U.K.
Things have improved somewhat in the economy since Shinzo Abe became “ministers ” in December 2012, with gross national product expanding 2.7 percent between then and the end of 2015. The progression remains bumpy and GDP has contracted in five of 12 quarterss since Abe became leader. There is a risk that data Wednesday may demonstrate a sixth contraction.
Core inflation spiked briefly to 3.4 percent in 2014, mainly due to a sales-tax hike, but is now back below zero as the collapse in oil prices undercuts the effects of the Bank of Japans massive monetary stimulus. Europe faces similar problems spurring price gains.
The Japanese stock exchange is about 10 percent lower than it was at the beginning of 2008, and has been on a roller coaster ride that considered it rally thanks to the BOJs attempts, until it began falling again late last year.
While Toyota sits at the top of global rankings for automobile companies, much of corporate Japan has under-performed versus challengers since 2008, with the number of companies ranked in the top 100 for market value unchanged at four, according to data compiled by Bloomberg. About half the names on the list are from the U.S ., while 11 are now from China.
The yens strength this year is increasing the pressure on Japanese exporters, following the tailwind offer by its marked depreciation during the initial years under Abe. The insistence of Japanese policy makers that the nation can intervene in foreign exchange markets if moves become too extreme is likely to get a frosty reception from other G-7 nations.
Although there has been no government intervention in the foreign exchange market since 2011, the U.S. set Japan on a new watch list over its currency practices. It called on Japan to use all policy tools and not rely too on one lever such as monetary policy to promote the economy.
Japans option of Sendai for the finance chiefs meets is designed to highlight reconstruction efforts in the region, which was struck by the massive earthquake and tsunami in March 2011 that killed an estimated 16,000 people.
The location is also a stark reminder of another big change since 2008. While some officials back then recommended increasing nuclear energy amid surging petroleum expenses, there is unlikely to much talk of this now with crude prices down nearly 70 percent and radiation still leaking from the crippled Fukushima power station less then 100 kilometers( 60 miles) to the south.
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