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CONTENTS

Countries chosen for analysis

• Japan
• China
• Bangladesh

Macroeconomic variables TAKEN under consideration

1. Unemployment
2. Inflation
3. Deficit
4. Government Revenue
5. Exchange Rates

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 COUNTRY WISE ANALYSIS

JAPAN
The economy of Japan is a highly developed free-market economy. It is the
third-largest in the world by nominal GDP and the fourth-largest by
purchasing power parity. It is the world's second-largest developed
economy. Japan is a member of both the G7 and G20. According to the
International Monetary Fund, the country's per capita GDP was at $41,637.
Unemployment
• At 2.8 percent in July 2021, Japan’s unemployment rate is very low. The fact that it has
remained this low for a full year would concern most economists in any other country.
• However, since Japan has been fighting deflation for many years, the normal rationale
does not apply.
• Unemployment can arise from an economic recession, when demand falls and firms lay
off workers. Economists consider this to be efficient in most cases because it gives
firms and workers the time to find the best match.

Indicator Data Period

Consumer Price Index

100 index points Dec/21
(CPI)

Food Inflation 2.1 % Dec/21

Inflation Rate YoY 0.8 % Dec/21

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 Inflation Rate Mom 0.1 % Dec/21

Core Consumer Prices 100 Index Points Dec/21

Core Inflation Rate 0.5 % Dec/21

CPI Housing Utilities 101 Index Points Dec/21

CPI Transportation 92.5 Index Points Dec/21

Inflation
• Japan’s inflation rate has remained stubbornly low since the 1990s, sometimes even
becoming negative - or deflation. This has caused firms to delay investment and
consumers to delay major purchases, which has in turn led to low GDP growth.
• In most economies, this would lead to high inflation. However, given the decreasing
population and thus, the decreasing workforce, it is possible that firms are retaining
workers due to labour scarcity.
• It is also possible that low unemployment is a product of high government spending or
low workforce participation. In any event, this statistic underscores the unique situation
of the Japanese economy.

Indicator Data Period

Consumer Price Dec/21

100 index points
Index (CPI)

Food Inflation 2.1 % Dec/21

Inflation Rate Dec/21

0.8 %
YoY

Inflation Rate Dec/21

0.1 %
Mom

Core Consumer Dec/21

100 Index Points
Prices

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 Core Inflation Dec/21
0.5 %
Rate

CPI Housing Dec/21

101 Index Points
Utilities

CPI Dec/21
92.5 Index Points
Transportation

Deficit
• The combined net lending by the household and corporate sectors in Japan has exceeded
net borrowing by the public sector, resulting in current account surpluses (or net lending
to the foreign sector).
• For 2020, the government deficit is expected to jump to 10 percent of GDP, boosting
public debt to 252 percent of GDP.
• The fiscal deficit will be accommodated by increases in net lending by the household
and corporate sectors, consistent with currently weak demand conditions and high
precautionary savings.

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Government Revenue
• Increased government spending is likely to cause a rise in aggregate demand (AD). This
can lead to higher growth in the short-term.
• It can also potentially lead to inflation. Higher government spending will also have an
impact on the supply-side of the economy – depending on which area of government
spending is increased. If spending is focused on improving infrastructure, this could
lead to increased productivity and a growth in the long-run aggregate supply.
• If spending is focused on welfare benefits or pensions, it may reduce inequality, but it
could crowd out more productive private sector investment.

Exchange Rates
• The Japanese yen has see-sawed in the last 35 years, particularly in the first decade after
the 1985 Plaza Accord, in which a deal was made to devalue the U.S. dollar, therefore
strengthening the yen.
• This shift has hit Japanese employment and consumption, even impacting companies
outside manufacturing or those that are entirely domestically-based.
• The companies have enjoyed greater stability by becoming less vulnerable to the downsides
of exchange rate movements, but the strength of the overall domestic economy going
forward is more tumultuous.

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China
The economy of the People's Republic of China is a developing market-oriented
mixed economy that incorporates economic planning through industrial
policies and strategic five-year plans. Dominated by state-owned enterprises
(SOEs) and mixed-ownership enterprises, the economy also consists of a large
domestic private sector and openness to foreign businesses in a system
described as a socialist market economy.

Unemployment
• The annual unemployment rate of China is within the range of 3.76% and 4.89% in 2007
and 1991 respectively.
• This shows that out of 100 people who are actively searching and willing to work to receive
some income only 4 to 5 people are unable to secure employment.
• This really shows that unemployment rate in China which falls in the range of 3.76% to
4.89% is not high but moderate and it really shows how the economy of China is able to
contain most of the available human capital or labour force.

Inflation
• According to preliminary figures published by the National Bureau of Statistics of China
in January 2022, the average annual inflation rate in China ranged at around 0.9 percent in
2021 compared to the previous year.
• Projections by the IMF published in October 2021 expect the inflation rate to reach about
1.8 percent in 2022.
• The monthly inflation rate in China ranged at a moderate level recently

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Deficit
That effort has shown some results. China’s outstanding total social financing, a broad measure
of credit and liquidity in the economy, rose 11% from a year ago at the end of May slowing
from a 11.7% growth a month earlier.

Government Revenue
• This graph shows the annual revenue generated by the central government of China from
2011 to 2020.
• In 2020, the total public revenue of the Chinese central government had amounted to
approximately 8.28 trillion yuan.

Exchange Rates
• Overall, China's exchange rate undervaluation has mixed effects on trading partner's
GDP, exports and imports.
• The devaluation of China's RMB efficiently stimulated China's exports and reduced
imports. While, in some countries, this effect is reverse, the RMB undervaluation
increases the GDP of partner countries and also increases their exports to China.
• The results confirm the strong and leading role of the Chinese Renminbi in the global
trade

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BANGLADESH
The Economy of Bangladesh is characterised as a developing market
economy. It is the 33rd largest in the world in nominal terms, and 31st
largest by purchasing power parity. It is classified among the Next
Eleven emerging market middle income economies and a frontier
market. In the first quarter of 2019, Bangladesh's was the world's
seventh fastest-growing economy with a rate of 8.3% real GDP annual
growth.
Unemployment
• Most of Bangladesh’s workforce is employed in the tertiary sector, which is gaining
workers while the share of employed people in the primary sector, including agriculture, is
decreasing.
• The country’s GDP is on a steady upswing, while inflation seems to recover and level off
at around 5 percent for now. Bangladesh is, after all, one of the world’s fastest-growing
economies.

Inflation
• In 2021, the inflation rate in Bangladesh amounted to about 5.56 percent compared to the
previous year. For the next few years, inflation in Bangladesh is forecast to stay around
5.45 percent.
• Bangladesh is a mixed economy on the rise, with a soaring gross domestic product (GDP)
and steady economic growth.
• While its unemployment has increased slightly since 2010, it seems to rest comfortably
below the 4.4-percent mark. Employment is shifting from agriculture to services – the main
GDP generator of the country.

Indicator Data Period

Consumer Price
306 index points Nov/21
Index (CPI)

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 Food Inflation 5.43 % Nov/21

Inflation Rate YoY 5.98 % Nov/21

Inflation Rate Mom -0.49 % Nov/21

CPI Transportation 313 Index Points Nov/21

Deficit
• The statistic shows Bangladesh's budget balance in relation to GDP between 2016 and
2019, with projections up until 2026.
• A positive value indicates a budget surplus, a negative value indicates a deficit. In 2019,
Bangladesh's budget deficit amounted to around 5.43 percent of GDP

Government Revenue
• In 2020, government revenue in Bangladesh amounted to approximately 9.4 percent of the
nation's gross domestic product (GDP).
• This was a decrease from the previous year, in which the government revenue in
Bangladesh amounted to approximately 9.9 percent of the country's GDP.

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Exchange Rates
• There is a positive relationship between exchange rate, export and GDP. The value of R2
is 98.8%.
• This indicates that about 98.8% of the total variation in the GDP is explained by the
exchange rate and export in Bangladesh.

Comparative Analysis of the countries

Unemployment
The unemployment rate in Bangladesh is the highest and least in Japan. Average mean income
is also the highest in Japan which leads us to understand that the disparity between the rich and
poor is very high in Bangladesh. This translates to that the effect of unemployment over the
GDP is considerable in Bangladesh, as it has resulted in disguised employment and wastage of
resources. China performs decent in this macroeconomic variable potentially due to the fact
that its economy is very huge.
Inflation
Inflation rate in Bangladesh is also the highest due to imports over exports, causing rise in
prices. The manufacturing industry in China is well establishes therefore goods being produced
domestically, causing no price fluctuations. Japan’s inflation rate has remained stubbornly low
since the 1990s, sometimes even becoming negative - or deflation. This has caused firms to

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delay investment and consumers to delay major purchases, which has in turn led to low GDP
growth.
Deficit
Deficit relates to the difference between revenue and expenditure. Capital expenditure in China
and Japan is high and they are developed countries. This helps us understand that they often
spend over their revenue, a reflection of their borrowings. Bangladesh being a smaller economy
and a developing country spends less and has less borrowings, having the least deficit rate.
Government Revenue
China - 8.23 trillion yuan
Japan - 96.3 trillion Japanese yuan
Bangladesh - 351523 BDT Billion
According to the statistics and analysing data we see that the government revenue rate in China
is highest while the Bangladesh government spends less on comparing it with countries like
Japan and China. It is because of the political (citizen) involvement, economic influences,
social and demographic change, and legal and intergovernmental matters.
Exchange Rates
Exchange rates
JPY (Japanese Yen), BDT (Bangladeshi Taka), CNY (Chinese Yuan)
1 JPY = 0.74 BDT
1 JPY = 18.18 CNY
On comparing the exchange rates of JPY to CNY and BDT, we found that BDT (Bangladesh)
has the lowest exchange rate followed by JPY (Japan) and CNY (China) has the highest
exchange rate. The interest rate, supply, and demand affected the exchange rates. Since
Bangladesh as a country shows less economic growth than Japan's and China's country's
economic growth, hence it affected their exchange rates accordingly.

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