11 March 2011 is a day that will never be forgotten in Japan. That day Japan experienced the most powerful known earthquake ever to have hit Japan (9.0 magnitude) and cause millions of dollars in damage and over 20,000 casualties.

How can Japan’s economy recover after this tragedy?

Due to the natural disasters, Japan’s tourism has greatly decreased in the past year. According to the “World Travel & Tourism Council”, it was estimated that in April, the visitor numbers fell 62% compared to the previous years.

Japan has been working hard towards recovering after the disaster, Japan’s tourism and travel industry was expected to provide nearly “1.5 million jobs in 2011 and contribute to 2.2% of its GDP”.

Due to this natural disaster, other countries that rely on Japan to manufacture products will be expecting a shortage in the supply. Econ concept: shortage in supply will cause price to rise thus affecting the economy.

Although it appeared as Japan took a critical hit, they have been struggling for the past 6 months to recover and “while a full recovery is still some way off, the situation has improved significantly”, said the WTTC.

For more information:

http://www.bbc.co.uk/news/business-15199815

In the past few decades, China has been the country to buy cheap goods from since their minimum wages was trivial compare to minimum wages in North America or Europe. China’s manufacturing sector became the world’s second largest economy and world’s largest exporter.

However recently, China has lost their advantage in producing cheap goods. Report by KPMG consultants says that China’s minimum wages levels are now four times greater than places in  South East Asia. Indonesia and Bangladesh are benefiting the most as rising cost in China hinders them from producing cheaper goods.

China is currently at its highest rate of inflation in 3 years; due to this inflation much of the manufacturing and production has shifted from the south and east to cheaper provinces such as Sichuan.

China’s rising manufacturing costs are due to the country’s demographic. A few years ago, China declared a one child policy to its citizens and that policy has resulted in a drastic drop in chinese local labor, thus increasing cost of minimal wages.

Quick Econ concept: Supply for labor force decreases while demand for goods and services remains the same causes a shortages in the supply—> which in results increases price of wages

For more information about this topic:

http://www.bbc.co.uk/news/business-14743131

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