Call it globalization, call it the domino effect, call it whatever you want. But it is here and it is here to stay. In a way it is true that globalization does affect the whole world. A crisis in Saudi Arabia is likely to be felt in Sweden too. The world economy is no longer a collection of separate economies. All economies are now inter-linked, inter-connected and inter-dependent. There is no looking back.
Now Japan is a very important country in the international perspective. Until recently, Japan was the second-largest economy in the world. It is hard to imagine that a small country like Japan, a bunch of small islands, can have the second largest economy and can beat countries like India, Germany, South Africa, Russia and others.
The earthquakes and tsunamis have affected the country a lot. The worst problem remains the one at Fukushima. The entire plant had to be closed down due to radiation leaks which had reached the levels of Chernobyl.
It is important to understand that the Japanese economy relies on its abundant industries. It is a highly industrialized economy that supplies to both domestic and export markets. Now it is impossible to have a highly industrialized economy like Japan depending on conventional fossil fuel energy sources. It needs to look at more unconventional sources of energy which is cheap and is non-polluting. Nuclear power fits the bill.
It is tragic that the plant at Fukushima was hit. Fukushima was a big plant and it provided electricity to quite a large area of Japan. The entire plant, consisting of so many reactors had to just shut down because of excessive radiation leak.
As a result, many industries had to shut down so many units. Factories have been shut down either because there is no power or because the factories themselves have been destroyed in either earthquakes or tsunamis.
So how is it going to affect you?
Planning to buy that Toyota Camry? Or a Nissan X-trail? Or any Japanese vehicle for that matter? You can book your car but be assured that you’ll get your car after a really long time. Did your Japanese car just break down? Chances are that it will remain that way for quite a while because spare parts may not be available in the market that easily for sometime. Factories in Japan are shut down due to power shortages. Your car and its parts are stuck in the long line. But you never know, it might be worth the wait.
Want to buy that Sony Handycam? You might find that the prices of Japanese brands may just skyrocket because there are very few pieces left and it is unlikely that more units of that product will come from Japan for sometime to come. DVD Players, Television sets, Laptops, MP3 players, Handycams, Cellphones, Cameras, Speakers and other electronics from Japan won’t be available. Looks like you’ll have to adjust with a Samsung than a Sony.
3. Financial sector
Looking for a new loan? Boy, you’re in for a real tough time.
First of all, the world is reeling from the after-effects of a major recession. Banks are still very reluctant about giving loans to people. Japan’s financial sector was considered a really strong one. Now since the whole thing blew over, there is very little money left with Japan. To make matters worse, seismologists have predicted that the earthquakes in Japan are going to continue for a year. For a whole year, the Japanese economy will be trying to somehow repair the damages with the money it has. Japanese banks are no longer able to loan more money. There is very little money left in Japan. How can they possibly give more loans?
So you see, the crisis in Japan has affected you somewhere. Let us hope that the situation calms down in Japan and it comes back to normal.
Copyright © 2011 AshwathKomath