Halfway Around The World, Brexit Hits Japan's Already Soft Economy : Parallels The world's third largest economy is still struggling to gain traction under Prime Minister Shinzo Abe. The British decision to leave the European Union has delivered another blow.
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Halfway Around The World, Brexit Hits Japan's Already Soft Economy

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Halfway Around The World, Brexit Hits Japan's Already Soft Economy

Halfway Around The World, Brexit Hits Japan's Already Soft Economy

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LINDA WERTHEIMER, HOST:

Markets around the globe are trying to cope with the British decision to leave the European Union. In the world's third-largest economy, Japan, Brexit means nothing good. NPR's Elise Hu reports from Tokyo.

ELISE HU, BYLINE: One Thursday a month, Michiko Sato lines up under a train overpass to pick up and pack up a free basket of food.

MICHIKO SATO: (Through interpreter) Seaweed, tea and sauce and biscuits in a can.

HU: It's made possible by Second Harvest, a nonprofit national food bank. Because Japanese companies have traditionally employed people for life, the government here doesn't provide much help for those who bounce from job to job. And lately, there are more and more non-corporate employees like Sato.

SATO: (Through interpreter) I feel like that's one of the biggest problems. There's only temporary jobs - jobs available to people like me. So...

HU: She's working two of them - one as a cashier, the other checking people into a gym. It's not enough to feed her teenage son.

CHARLES MCJILTON: There's not a safety net here for people in need.

HU: Charles McJilton is the founder of Second Harvest.

MCJILTON: And the nonprofit sector here is still very, very small. I would easily say it's less developed than the Philippines, less developed than India.

HU: Leaving a whole segment of the Japanese population - mostly part-time workers, single moms and children - struggling. William Pesek is executive editor of Barron's Asia and the author of the book "Japanization."

WILLIAM PESEK: Over time, it's become very difficult for the government to keep up with this problem and this trend.

HU: In 2012, voters elected the party of Japanese Prime Minister Shinzo Abe on a promise to return Japan to growth with his eponymous plan, Abenomics. By now, Pesek says, the economy was supposed to be faring better than this.

PESEK: And three and a half years on, the metrics are pretty dismal at this point for Abenomics. And the metrics, initially, were measured by the stock market rising, by exports increasing and the hopes that companies would be increasing wages.

HU: The idea was that would help lift up the Japanese at all levels with better jobs and better pay.

PESEK: We haven't seen that part of it. And that's kind of the problem.

HU: The problem has only gotten trickier in recent days. After the Brexit vote, the Japanese stock market saw its largest single-day drop since the year 2000. The country's exports became far pricier and less competitive as the value of the Japanese yen soared. All the while, households aren't spending money, meaning they're failing to fuel the economy.

HU: (Speaking Japanese).

HU: "We need to take all possible measures to prevent the Brexit from affecting the Japanese economy," Prime Minister Abe said Monday morning. He didn't signal which measures Japan would take.

HU: Moms at the food bank pick-up say they don't have time to consider the geopolitics involved. They just want to feed their families without such a struggle. Thirty-four-year-old mom Tomomi, who didn't want to share her full name because of the shame attached to poverty, came from an hour outside Tokyo, wearing her 2-year-old and dragging a suitcase to hold the food.

TOMOMI: (Through interpreter) The fact that we can come here and get good food for free at least once a month makes a huge difference in our ability to just get by as a family.

HU: To help families get by, Japan did delay a planned increase in sales taxes, which would have hit the working poor harder than others.

JACOB LEW: But they can't do that forever because, ultimately, Japan also has a very large debt.

HU: That's U.S. Treasury Secretary Jacob Lew when asked about the state of Abenomics last month.

LEW: They can defer bringing those taxes into place. But they need to use the space they create to put structural reforms in place at the same time.

HU: He's talking about reforms like loosening immigration restrictions, getting more women to work and making it easier to start new companies. But changing the structural makeup of Japan's economy is an arrow that hasn't quite flown. William Pesek.

PESEK: And I would give it, maybe, a kind D-minus, frankly.

HU: The situation's gotten more dire. But the clock for Prime Minister Abe hasn't run out. He's expected to stay in power after parliamentary elections next month. Elise Hu, NPR News, Tokyo.

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