Japan Big Company Sentiment: April- June Gtr.

Japan big companies' sentiment sours in April-June qtr, hurt by Iran war.

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TOKYO (Kyodo) -- Business sentiment among major Japanese companies worsened for the April-June period, with a key government survey index released Thursday slipping into negative territory for the first time in four quarters, reaching minus 0.5, driven by rising material costs due to the Middle East conflict.

The Business Survey Index measuring companies' economic assessment fell from 4.4 in the previous survey for the January-March quarter as more manufacturers, led by those in the automotive and food sectors, said conditions were declining, the joint survey by the Cabinet Office and the Finance Ministry showed.

Sentiment among major manufacturers deteriorated to minus 1.8, compared to 3.8 in the survey for January-March period, according to the survey.

The poll reflected results as of May 15, more than two months after the launch of U.S.-Israeli attacks on Iran disrupted shipments of oil products and sent crude prices soaring.

Business confidence among major nonmanufacturers weakened to 0.027 compared to 4.6 in the previous poll, with firms in the construction sector citing price increases of raw materials, the Business Outlook Survey showed.

The survey analyzes business leaders' assessments of and forecasts for the economy and covers responses from more than 10,000 companies that have established their headquarters or principal offices in Japan and have capital stock of 10 million yen ($62,000) or more.

The index is measured by subtracting the percentage of companies that reported worsening business conditions from the percentage that reported improving conditions.

Article source:  https://mainichi.jp/english/articles/20260611/p2g/00m/0bu/016000c

Japan May Wholesales Prices: Ideas Later. To be continued.

Japan's wholesale prices up 6.3% in May, fastest rise in over 3 years

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TOKYO (Kyodo) -- Japan's wholesale prices rose at their fastest pace in over three years in May, up 6.3 percent from a year earlier, highlighting rising inflationary pressures in Japan due to the Middle East conflict, the Bank of Japan said Wednesday.

Ideas

For many years, Japanese companies both retail and wholesale were reluctant to increase prices and or pass-on their prices to the next in the supply chain including the final retail customer as they valued their relationships with their customers and tried to absorb their costs as much as they could.

But those days seem long gone, as material costs increase, the pressure to increase labor or wage costs continue to increase as companies, these days, feel they have no choice but increase costs and now, for some or many its survival in the marketplace.

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The data showed the pace of increase accelerated from a revised 5.3 percent in April, reinforcing the view that the BOJ is on course to raise its key policy rate when the Policy Board meets next week.

Ideas

Yes, it appears, all the pieces are falling into place for the BOJ to increase its key policy relate as a preventive measure to try and reduce inflation like many countries do when their inflation increases beyond what a central bank thinks it should be.

Most central banks prefer to see inflation at around 2 percent as they feel its a manageable level and many central banks thinks at that rate a country's economic activity is at a good level for the economy.

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After leaving the benchmark rate unchanged for a third consecutive policy meeting, the central bank is expected to lift it to a 31-year high of 1.00 percent from the current 0.75 percent amid growing inflation risks posed by elevated crude oil prices, according to sources familiar with the matter.

And again, if the BOJ does increase the rate to 1.00, even though there might be some negative side affects, to be sure, the BOJ has considered what the side affects will be and have taken into account how much the Japanese economy will be affected by the rate increase.

There is no real guarantee that the rate increase will slow inflation or even have a significant effect on inflation as a rate increase, for the most part,, is just a prescription like in medicine and sometime prescriptions work immediately and sometimes they take a while to work.

Ideas

Wholesale prices, which are the prices at which goods trade between companies, affect consumer prices with a delay.

The 6.3 percent year-on-year increase was the largest since March 2023.

Ideas

Yes, the wholesale price increases are usually delayed before they begin to affect consumer prices or retail prices as some companies might pass-on their increased costs immediately and some might wait and some might only pass-on parts of the price increase a little at a time to not cause too much stress to the final retail customer.

For a very long time, it appeared that BOJ in dealing with inflation was taking a hands-off approach and maybe was hoping the inflation would naturally decrease as some have suggested the BOJ felt the Japanese economy was just to weak to increase the key rate as their would be too many significant side affects affecting the economy.

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Resources-poor Japan has depended heavily on imports from the region before the U.S.-Israeli attacks on Iran in late February led to the effective closure of the Strait of Hormuz. In response, the country has promoted purchases from alternative sources albeit at a higher cost.

Ideas

To be continued....

Concerns have grown that the increases in wholesale prices will be reflected in the prices of products and services purchased by ordinary households.

Petroleum and coal products gained 13.8 percent from a year earlier, while chemicals and related products including materials made from oil-derived naphtha, climbed 13.4 percent, the data showed, reflecting disruptions in oil and derivative supplies from the Middle East.

A BOJ official said the data for the reported month shows that price hikes have been spreading from the upstream stage, represented by oil and coal products, to the midstream, such as polyethylene and other chemicals used in a wide range of products.

"Generally speaking, companies are likely to pass on rises in raw materials costs to prices of their products and services, or their profits would be hit," the official said, expressing the view that price hikes will continue broadly.

Import prices surged 25.5 percent from a year earlier, the largest gain since November 2022, propelled by rises in metals and petroleum, coal and natural gas amid the yen's weakness. Export prices jumped 20.6 percent, led by hikes among electric and electronic products.

Article source:  https://mainichi.jp/english/articles/20260610/p2g/00m/0bu/017000c

Japan Economy in Jan.-March: Ideas Later.

Japan's economy expands 1.8% in Jan.-March, revised down

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TOKYO (Kyodo) -- Japan's economy expanded an annualized real 1.8 percent in the January-March quarter, revised down from an initially reported increase of 2.1 percent as capital investment slowed, government data showed Monday.

It marked the second consecutive quarter of growth, but many economists believe the prolonged Iran war will likely weigh on the Japanese economy in the April-June quarter by fueling inflation, weakening private spending and disrupting supplies of petroleum products.

Real gross domestic product, adjusted for inflation, grew 0.45 percent from the October-December period, down from a preliminary reading of 0.51 percent, a Cabinet Office official said.

GDP is the total value of goods and services produced in a country.

In the latest GDP data, capital spending fell 0.7 percent in the three months through March, revised down from a 0.3 percent increase, as investment in software and production machinery was weak.

A Cabinet Office official said the downward revision reflects separate government data on business investment by Japanese companies in the quarter, adding the impact of the Middle East conflict on the data was unclear.

Public investment was upgraded to a 1.5 percent rise from a 1.4 percent increase.

Private consumption, which accounts for more than half of GDP, grew 0.35 percent in the quarter, revised up from the preliminary 0.27 percent, helped by robust outlays for dining and spending on games, the official said.

Housing investment was revised upward to a 0.9 percent rise from the 0.5 percent increase reported earlier.

Exports rose 1.8 percent from the previous quarter, revised up from a 1.7 percent climb, supported by a recovery in auto shipments bound for the U.S. market. Imports were downgraded to a 0.4 percent increase from a 0.5 percent rise.

GDP was pressured 0.1 percentage point by a reduction in private inventories, apparently due to the government's decision to release oil from stockpiles, starting with those held by the private sector.

"Growth in the April-June quarter is forecast to hover around zero," said Yoshiki Shinke, senior executive economist at Daiichi Life Research Institute Co., noting the biggest concern is the adverse impact of supply uncertainty and procurement difficulties amid tensions in the Middle East.

The conflict has disrupted the supply of oil and petroleum products to the resource-poor country amid the effective closure of the Strait of Hormuz after the United States and Israel launched attacks on Iran on Feb. 28.

Prolonged tensions could hit Japan's exports bound for the Middle East, while concerns are heightening that elevated crude oil prices would drive up inflation.

To brace for the impact of rising energy costs, Japan's parliament on Friday enacted a 3.11 trillion yen ($19 billion) supplementary budget for this fiscal year that marks the government's first fiscal spending package in response to the Middle East crisis.

Nominal GDP expanded at an annualized rate of 2.5 percent, revised down from a 3.4 percent gain reported earlier.

Article source:   https://mainichi.jp/english/articles/20260608/p2g/00m/0bu/008000c

Japan April Current Account: Updated June 9, 2026.

Japan April current account surplus at 3.91 tril. yen on overseas returns

Ideas

International trade is very important for Japan has Japan is a major export nation and relies heavily on its exports or even it overseas investments to increase it current account.

A country's current account is like a country's Bank account as it is monitored very closely and for the most part, a country's budget is somewhat determined by it current account but not always.

It should be remembered that Japan has had a weak currency for a long time, which means it can get more income from its overseas investments and exports as it helps to increase the current account. 

Japan, it seems, doesn't have a lot of economic drivers to help grow its economy or even sustain its economy as it seems to depend on only a few things such as exports and overseas investments. 

While this might be good when the global economy is good, if the global economy goes astray and exports and overseas investments begin to fade, Japan doesn't seem to have any other real drivers to depend on as its domestic economy is, for the most part, not as strong as its export base.

Most likely, not only Japan, but most economies globally have seen decreases in exports to the Middle Eat along with a decrease in travelers that part of the world.

Unfortunately, as the situation continues on, there could be less exports and less travel to that region for a long time, and even more less imports to Japan such as energy or oil from the region too.

Yes, it might be somewhat difficult, at this time, to see the full impact just yet, as sometimes trade stats are not easy to see or not coming in correctly on time, so its hard to get the full picture of what's going on.

Sometimes, companies and even countries, with very sophisticated global supply chains today, can find ways to overcome supply chain disruptions which might be happening right now as there might be other products or services can be substituted for those in the Middle East that are not making it through the normal supply chain distribution system.

Japan's overseas investments are very important to its current account as they help to bring in needed funds which help fuel Japan's many supplementary budgets that it seems to do every few months which props up its economy, giving subsidies to Japanese households for higher than normal energy or gas prices. 

And its goods trade is equally important as again, Japan's economy, since 1945, has been heavily focused on exports and at one time, in the 1980's, Japan might have been considered the global leader in goods trade as it was producing many of the world leasing products during that period.

Japan like South Korea, which actually learned from Japan how to develop its export base, has for the most part, again, developed it economy around exports and not so much its domestic economy, which in itself is huge but doesn't grow that much.

And again, Japan and both South Korea seem to depend on just a few economic drivers to grow their respective economies. Japan, it seems, depends on its car industry to fuel its global exports, while South Korea, it seems, depends on Samsung and its semiconductor exports to grow its economy.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20260608/p2g/00m/0bu/009000c

Japan Bankruptcies in May: Updated June 8, 2026

Japan bankruptcies in May down 8.9% from previous year.

Ideas

Banks in Japan, for the most part, have always been very human centric, meaning they don't just look at the bottom line but they look at the big picture, for the company and for society, compared to some or many banks in the US that just see the bottom and line and not the human side of business.

At the same time, unfortunately, in a market economy, there are always going to be those who can overcome difficult situations, and even with help, some are just not going to make it, as its just part of how a market economy works.

Not to be negative or downplay what happens, there might be a sizable number of Japanese companies that might be considered zombie companies, meaning they are just existing and not able to really do anything productive or doing anything to really help themselves.

Some or many companies, who are being adversely affected by soaring prices are probably small and mid-size companies and some of them could be suppliers to large companies and its quite possible that the large companies might be refusing the idea that small supplier type companies want to pass-on their increased costs to the next in their supply chain, which in this case involves the larger company.

And then there is the idea of companies with very thin profits margins just can't increase the wages that their employees want or need and can't increase wages to try and attract to news, and as result, unfortunately, some might choose to shut down or exit the market.

This is where Japanese banks can be even more human centric and find ways way to help the companies that deserve to be saved while understanding that not all companies should be saved as the market, for the most part, should also determine which companies survive and which need to exit the market.

A market economy is always going to have companies that enter a market and those that exist a market and those that are innovative then there are those, which just can't seem to make it no matter what they try.

Service type companies are usually the easiest to enter in a market but require a lot of time and sometimes the costs are just too high for many as in the case of restaurants, raw material costs might be out of control and restaurants can't keep increasing prices and they know they will loose many of their customers over time.

And then there is the ideas of labor costs, as again, as Japan is in a so-called labor shortage, it means workers in Japan, for the most part, have a choice and again means they can look for a company that can pay higher wages compared to those that can't.

As a result, those whose profit margins are just too thin can't afford to increase wages, probably due to increase in raw material costs, which means they have to keep wages low or they will not make a profit and it becomes very cyclical meaning a company just can't get past the constant high prices and the constant need to increase wages to keep employees.

Small and mid-size companies,, it seems are always the ones that go out of business as SMEs, and it is estimated make up 99 percent of all companies in Japans, so it not a surprise that some or many small companies have to exit the market.

Again, while Japanese banks are much more human centric than US banks there comes a time when maybe even the banks can't help some companies and those companies eventually need to exit the market.

Unfortunately, it must be remembered there is the human side of bankruptcies as families are being adversely affected and this is where a bank or other agencies can try to step in and provide assistance to the families being affected by the bankruptcies as sometimes it can be very devastating to those involved.

Have a nice day! 

Article source:  https://mainichi.jp/english/articles/20260608/p2g/00m/0bu/024000c

OECD Korea Growth Estimate: Ideas Later.

OECD lifts Korea's 2026 growth forecast from 1.7% to 2.6% amid semiconductor surge

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Containers for export are stacked at Pyeongtaek Port in Gyeonggi Province, May 8. Yonhap

The OECD significantly upgraded its growth outlook for the Korean economy this year, raising the forecast to 2.6 percent from 1.7 percent on expectations that booming semiconductor exports will outweigh risks stemming from the Middle East conflict, according to the Ministry of Finance and Economy, Wednesday.

The ministry said Korea recorded the largest upward revision among G20 economies in the OECD’s latest projections.

After lowering Korea’s growth outlook to 1.7 percent from 2.1 percent in its March report over concerns about the Middle East conflict, the OECD has now reversed course with a substantially more optimistic assessment.

The sharp upward revision appears to reflect Korea’s stronger-than-anticipated economic performance in the first quarter. According to preliminary data released by the Bank of Korea (BOK), real gross domestic product (GDP) expanded 1.7 percent from the previous quarter.

The OECD’s new forecast is in line with the BOK’s latest projection announced last month and stands slightly above the Korea Development Institute’s 2.5 percent estimate. It remains below the Korea Institute of Finance’s 2.8 percent outlook.

Pointing to semiconductors as the key growth driver, the OECD said Korea has seen a sharp rise in exports since the start of the year, with both export prices and shipment volumes posting solid gains.

The organization also forecast continued strength in private investment, led by semiconductor-related spending, with the momentum expected to spread to broader industries later this year.

Despite the improved outlook, the OECD warned of several downside risks facing the Korean economy, citing potential supply disruptions linked to tensions in the Middle East and labor unrest in industrial sectors.

Additionally, the organization projected the country's consumer inflation to average 2.6 percent this year before easing to 2.2 percent next year.

“The OECD assessed long-term inflation expectations as remaining stable and viewed government measures such as price controls and fuel tax reductions as effective in easing inflationary pressure caused by energy supply disruptions,” a ministry official said. “At the same time, the OECD warned that these policies could prolong inflationary pressure and therefore advised that they be withdrawn gradually.”

Meanwhile, the OECD trimmed its global growth forecast by 0.1 percentage point to 2.8 percent while leaving its G20 outlook unchanged at 3.0 percent.

The OECD attributed the downward revision in its global growth outlook to mounting pressure from rising energy prices and disruptions to global trade following the closure of the Strait of Hormuz.

With the recent spike in energy costs linked to the Middle East conflict, the organization projected inflation among G20 economies at 4.0 percent this year and 3.1 percent next year.

Article source:  https://www.koreatimes.co.kr/economy/others/20260603/oecd-lifts-koreas-2026-growth-forecast-from-17-to-26-amid-semiconductor-surge

South Korea Consumer Prices: Ideas Later.

Consumer prices hit 26-month high, fueling rate hike expectations

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BOK sees inflation remaining above 3% amid prolonged Middle East tensions

Korea's consumer inflation accelerated to a 26-month high in May, driven by soaring oil prices amid the ongoing conflict in the Middle East, reinforcing market expectations that the Bank of Korea (BOK) could raise the base rate in July, market watchers said Tuesday.

Consumer prices, a key gauge of inflation, rose 3.1 percent last month from a year earlier, marking the fastest pace of growth since March 2024, according to data released by the Ministry of Data and Statistics.

The increase was largely driven by higher energy costs.

Prices of industrial goods rose 4.2 percent from a year earlier, while petroleum product prices jumped 24.2 percent, contributing 0.92 percentage points to overall inflation. This marked the steepest increase since a 35.2 percent surge recorded in 2022, following Russia's invasion of Ukraine.

The statistics ministry attributed the rise in consumer prices to a rebound in agricultural, livestock and fisheries product prices, as well as soaring oil costs linked to the conflict in the Middle East.

Market analysts said the stronger-than-expected inflation trend, coupled with the BOK's increasingly hawkish rhetoric, has strengthened the case for a rate hike in the coming months.

The central bank left its benchmark interest rate unchanged at 2.5 percent at its Monetary Policy Board meeting last Thursday, but signaled a more hawkish stance.

BOK Gov. Shin Hyun-song reinforced that message on Monday, saying Korea's stronger-than-expected economic growth poses "fewer impediments" to adjusting monetary policy in response to inflationary pressures.

"(Strong economic growth) gives us a lot more leeway to conduct monetary policy in an effective way to address inflation," Shin said.

Market expectations are growing that the central bank could begin raising interest rates as early as next month.

Park Seok-gil, an analyst at JP Morgan, projected 0.25 percentage-point rate hikes in July and October this year, followed by January and April next year.

"While growth is still led by the tech sector, spillover effects to domestic demand are expected, and demand-side inflation pressures are now being considered a major change," Park said.

Fitch Group also revised its outlook, saying it now expects the central bank to begin its tightening cycle in July and deliver two 0.25 percentage-point rate hikes, bringing the policy rate to 3 percent this year. The forecast marks a shift from its previous view that the BOK would wait until the fourth quarter to start raising rates.

Article source:  https://www.koreatimes.co.kr/economy/20260602/consumer-prices-hit-26-month-high-fueling-rate-hike-expectations