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Of countries in the developed world, Japan is apparantly being hit hardest by the global recession.

The 3.3 per cent reduction in GDP reported yesterday by Japan for the final quarter of last year is by far the largest economic contraction for any of the big developed nations announced so far, and dwarfs anything that Japan experienced during its infamous “lost decade” of growth during the 1990s.

Germany runs a close second with their GDP dropping by 2.1%. Comparatively, the US is doing well, with a slight contraction, and Britain’s economy shrank at a 1.5% rate in the last quarter. The author says Japan and Germany are suffering a bit more because their growth is dependent on large volumes of exports.

Now, my question. Are exports more vulnerable during a downturn? Or does a shrikage of export sales have a stronger impact on incomes? I don’t see why strong exports make these economies more vulnerable. 

(Sure, more vulnerable to protectionist policies, but I don’t think that is what is going on here.)

And why is China–another export economy–not hit harder? Yes, their growth rate is less, but still over 6% last quarter.

Please help.

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