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China 2010, steadily increase in GDP, reach the peak

Finland 2008-2010, economic crisis


Japan - Lost decade

In 2009, the global economic downturn caused the crisis in all economies in the world. It
also reduced foreign demand for Chinese exports for the first time in many years, but
what impressive is that China rebounded quickly, outperforming all other major
economies in 2010 with GDP growth around 10.3%. Measured on a purchasing power
parity (PPP) basis that adjusts for price differences, China in 2010 stood as the second-
largest economy in the world after the US, having surpassed Japan. Beijing’s massive
$586 billion stimulus program and more than $1 trillion in new lending have helped the
Chinese economy a drop in exports and strengthen its domestic market.

Facing the same problem, but it seemed like the economic crisis had leaved much more
negative affect to Finland. In 2010, the real GDP growth rate of Finland has dropped
dramatically to -8.10%, led by declining export volume which fell by close to one third .
As can be seen from the table, Finland GDP had increased eventually in previous years
but it started to decrease since 2009 when there was global economic crisis. After that,
in 2010, Finland has got deep into this crisis which made the country dropped from
180th rank to 250th rank and unemployment rate increased from 6.4% to 8.2%. The
reason of declining in export from Finland to other markets is that fast rising unit labor
costs due to high wage increases and an appreciating effective exchange rate have
deteriorated competitiveness of Finnish products. The high wage increases boosted
household income and sustained consumption through the downturn but the negative
effects on exports from lower competitiveness can weigh more heavily as the world
economy rebound.

Year GDP - real growth rate Rank Percent Change Date of Information
2003 1.10% 158 2002 est.
2004 1.90% 147 72.73% 2003 est.
2005 3.00% 140 57.89% 2004 est.
2006 3.00% 144 0.00% 2005 est.
2007 5.50% 83 83.33% 2006 est.
2008 4.50% 126 -18.18% 2007 est.
2009 0.90% 180 -80.00% 2008 est.
2010 -8.10% 205 -1,000.00% 2009 est.
2011 3.20% 112 -139.51% 2010 est.

Growth slowed markedly in the late 1990's also termed the the Lost Decade, largely due to the
Bank of Japan's failure to cut interest rates quickly enough to counter after-effects of over-
investment during the late 1980s.
Japan’s economy has been stagnant more or less continuously for more than a decade
(Japan’s so-called “Lost Decade”), and Japan’s growth rate during this period has been the
lowest among the major industrialized countries of the world. During the 1995-2002 period, for
example, the annualized growth rate of Japan’s real gross domestic product (GDP) averaged
only 1.2%, which is lower than all of the other G7 countries—Canada (3.4%), the United States
(3.2%), the United Kingdom (2.7%), France (2.3%), Italy (1.8%), and Germany (1.4%)--as well
as the Euro area average (2.2%) and less than half of all of the other larger OECD countries—
Korea (5.3%), Australia (3.8%), Spain (3.3%), the Netherlands (2.9%), and Mexico (2.6%).
Some economists believe that because the Bank of Japan failed to cut rates quickly enough,
Japan entered a liquidity trap. Therefore, to keep its economy afloat, Japan ran massive budget
deficits (added trillions in Yen to Japanese financial system) to finance large public works
programs.
By 1998, Japan's public works projects still could not stimulate demand enough to end the
economy's stagnation. In desperation, the Japanese government undertook "structural reform"
policies intended to wring speculative excesses from the stock and real estate markets.
Unfortunately, these policies led Japan into deflation on numerous occasions between 1999 and
2004.