Despite the fact that the Japanese economy has rebounded slightly in first several years of new millennium after the period of slow growth, it still faces some serious structural problems. At the beginning of the year 2004, there was some hope that more strong consumption demand as well as new better conditions in corporate sector would entail economic recovery. However these hopes did not materialize due to several factors:
As we can see Japan economy has been experiencing deflation during the last several years. Whereas other developed countries have experienced low inflation Japan still needs to curb deflation. That is why every company that operates in Japan faces the threats of deflation which entail: the risk of relocation of the debt from debtor to creditor; the risk of decreasing of the prices on the assets as well as the risk of continuation of stagnation.
However, these negative factors might be mitigated by effective monetary policy of the Bank of Japan. In order to remedy the threat of deflation Bank of Japan has implemented zero interest rate in order to maintain low interest rates of financial institutions. Despite the fact that Bank of Japan might announce some inflation objective, especially if the treat of inflation is evident, nevertheless one could hardly expect the tightening of monetary policy, in view of the lack of growth of the Japan's economy.
Besides, the financial sector of the Japan's economy is much healthier today than in the 90s. Commercial bank can boast of positive net income (the first time they have posted in since 1993). They have jettisoned most of non-performing loans from their balance sheets; nevertheless in spite of this notable progress their profitability remains low. 'Summing up all factors mentioned I think it is relatively easy to obtain the credit in Japan (with low interest rate).
Since 1990 the energy sector of Japan has started to consolidate (partly due to the stagnation). Japan has no substantial oil reserves and relies heavily on imported oil. There was a noticeable increase in the consumption of oil in 2003 (the consumption increased on 5 % during the period 2002-2003), largely due to the notable decrease in the number of nuclear plants in Japan during the period mentioned. Nevertheless nuclear plant will resume their work in 2004 that might entail some slight decrease of the demand on oil.
Japan has one of the highest GNP per capita in the world-29400 USD. Japanese people like to travel abroad and the demand on the traveling overseas was very strong even during stagflation, moreover there is strong demand on new vehicles. Thus it is possible to claim that potential market for oil industry is quite strong.
Despite the fact that Japan has had low economic growth during the last several years, government programs of liberalization as well as deregulation will produce positive impact on the economy and will undoubtedly