Japan has recently announced their unemployment rate has risen to 4.8% which has been their highest in years. They have been cutting jobs to save money and have recently hit a seven-year low on the number of people having jobs. Japan is suffering due to the domino effect. Japan does not have many natural resources, so for decades they have relied on their brains to create a successful economy. They are very advanced in their technology and without that who knows where they would be now. Being able to trade for natural resources is key for them. Things have been looking good for them as they announced in March they have hit a growth of 1.6% in production which they haven't seen for six months. However, they predict recovery will not begin until 2010. Japan's car companies have not been very successful. Nissan and Toyota sales have fallen by 28.6% this year. Japan might have to wait until the world economy resolves itself before they can begin to see results. Right now a way they have tried to resolve their situation is by lowering consumer prices to encourage buyers to purchase more. But, will this affect them in the long run? "Deflation will be damaging to the economy. Companies will have a difficulty increasing profits, and their effective burden from borrowing money will increase," says Analyst Takeshi Minami (chief economist of Norinchukin Research Institute).
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