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Overall Condition
of the Economy and Industries |
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| History |
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| Demand Created by the Korean War Boosts the Japanese Economy |
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| In the last stages of the Pacific War, Japan was pretty much reduced to ruins as a result of bombing by U.S. Forces, with its industrial infrastructure severely damaged. After the end of the War, there was a serious shortage of supplies, which led to hyperinflation and deflation to counter it. The economy saw continued stagnation. However, the Korean War, which erupted in June 1950, gave a boost that paved the way for the revival of the Japanese economy. A broad spectrum of demand was created by this war, from heavy industry products such as military trucks, locomotives, rail-track materials, oil drums, barbed wire and iron pillars, to services such as transportation and communications. This gave Japan the momentum for it to enter into its era of high growth. |
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| Consumer Boom for the "Three Sacred Treasures" of Japanese Households |
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A bullet train of the Shinkansen moving towards the high-speed run |
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Consumer consumption, which had been repressed during World War II through slogans such as, "Extravagance is the Enemy," and "We Shall Not Want until We Win," exploded when post-war chaos settled down in the 1950s. In particular, there was great demand for consumer electronic products such as television sets (monochrome), washing machines and refrigerators. These three items represented an affluent lifestyle and were called the "three sacred treasures."
In October 1964, the Tokaido Shinkansen (bullet train) Line commenced operations between Tokyo and Osaka. |
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| This was just prior to the opening of the Tokyo Olympic Games. Consumer demand from the latter half of the 60s shifted to the "three Cs," cars, coolers (air conditioners), and color TVs, and related industries experienced rapid growth. |
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| The Arab Oil Shock and Demise of the Post-war "Japanese Miracle" |
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| In August 1971, U.S. President Richard Nixon announced the New Economic Policy as measures to defend the U.S. dollar. The "Nixon Shock," which temporarily suspended the convertibility of the gold to the dollar as well as introduced new import surcharges, had a swift global impact. The value of the yen, which had been favorable for Japan in terms of exports, was forced to appreciate. This was followed by the first oil shock. The Fourth Arab-Israeli War broke out in October 1973, and Arab oil producers raised the price of crude oil by 70% and imposed an embargo on countries that supported Israel. This had a major impact on Japan, which had been consuming large amounts of oil. The price of not only oil products but also almost all daily commodities rose sharply. Consumers resorted to stockpiling while retailers held back on sales. It was a period of hysteria that saw a double-digit annual increase in commodity prices. |
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