Japan: A Disaster in the making

The Japanese economy has now become notorious as a lagging, marginally-growing market.

Japan is in the worst situation in its history since the end of World War II. Its population is aging to the point that it's experiences substantially more losses than births, the yen is increasingly becoming weaker against the dollar, and many Japanese companies are moving outside of Japan for cheaper, more large labor networks.

This makes this week's crash in the Japanese market come as almost no surprise, taking into account the developing conditions of the Japanese economy and population. Earlier this week, Japan's own index fund Nikkei 225 collapsed by over 4,400 points, taking the gold for the largest dip in share price for the index since 1987.

Furthermore, the value of the yen once again decreased, this time by nearly 2%, marking a shattering trend in the exchange rate of the yen. The yen has experienced drops in value for the past few years due to extremely low interests rates compared to the rest of the world, and its growing reliance on imports to sustain its large elderly population.

Despite these falls, the Japanese market recovered moderately in the middle of the week. On Tuesday, the Nikkei grew by over 10%, signaling a possible trend to recovery. Furthermore, the value of the yen increased against the dollar by 0.6%.

Nevertheless, the market trended downwards after the brief rallying period concluded. The Nikkei finished Thursday's trading day down 0.7%, highlighting that there needs to be more time for a full recovery, or that a second crash is still within the realm of possibility.

This does not take into account the market volatility right now with the chaotic 2024 presidential election across the Pacific in the United States, and Japan's continued policy of low interest rates. The vulnerability of the Japanese market right now highlights the importance of careful observation and action to avoid a possible economic recession.