Japan's Nikkei Index Hits 2-Year Low Amid EU Fears

Asian markets are nervously watching Europe's moves on the Greek deficit.

Copyright © 2011 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

DAVID GREENE, Host:

NPR's business news starts with fears of a global slowdown.

(SOUNDBITE OF MUSIC)

GREENE: The fear in the financial markets right now is not just about Europe's debt crisis or the U.S. economy, it's becoming broader, and economists in Asia are especially getting nervous. Here's NPR's Frank Langfitt.

FRANK LANGFITT: To Kiichi Murashima, the debt problems in Europe seem eerily familiar.

KIICHI MURASHIMA: I'm really concerned.

LANGFITT: Murashima is chief economist at Citigroup Japan in Tokyo. He says the current crisis reminds him of the days before Lehman Brothers collapsed in 2008, sparking that year's financial meltdown. Murashima says investors here worry if the European debt crisis spreads, bank-to-bank lending will begin to freeze up, as it did three years ago, and so will business decision-making in the U.S. and Europe.

MURASHIMA: And if this happens, there will be a significant impact on Japan's exports to the rest of the world.

LANGFITT: The European Union and the United States account for one quarter of Japan's exports, everything from Toyota Corollas to Sony PlayStations. Worried about a fall in demand, investors continue to dump stocks today. Murashima says the inability of European leaders to solve the current crisis reminds him of his own country.

MURASHIMA: The lack of political leadership is very similar to Japan's situation in the late 1990s and early 2000s.

LANGFITT: Back then, he says Japan's leaders knew they had to make tough decisions to avoid a deep recession.

MURASHIMA: But politicians could not implement them, because of the lack of political consensus. We are witnessing the same kind of situation in Europe right now.

LANGFITT: What followed in Japan was another decade of economic malaise. Frank Langfitt, NPR News, Shanghai.

Copyright © 2011 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.