And Some Korean Economy Observations: To be related to the Japanese Economy.

https://finance.yahoo.com/news/korean-economy-grows-fastest-quarterly-231443057.html

In 2017 the Korean economy grew 3.1%. In 2018 the Korean economy grew 2.7%, but in 2019, the economy, using the word only, only grew 2.0%.

Much of the decline might be contributed to the decline in demand for semiconductor chips, which is by far Korea's largest export product. An ever more, some have estimated that exports might be as high as 50% of Korea's GDP. Korea is highly dependent on global trade. When it is rising Korea's exports are rising. When it is decreasing Korea's exports are decreasing.

Some would say Korea needs a more balance economy, where exports and the domestic economy are somewhat equal, and or where consumer demand can take up the slack if exports decrease.  Because Korea is a small geographic region, the idea of consumer demand being strong enough has always been debated. The largest companies in Korea have long outgrown the domestic economy with most of the business of the largest companies being outside of the country.

Another major issue, is that there just aren't enough of the so-called good jobs, at the large companies to meet the needs of Korean university graduates. As such the jobless rate of university graduates in Korea, is among the highest in the OECD.

However, as I have often talked about in the economics classes I teach, just because economic growth is only 2.0% doesn't mean all is bad in the economy. Yes everyone would like to see a higher economic growth, but an economy is very complicated with many different sectors involved. A GDP of 2.0% is still good compared to many other economies. Most EU countries barely reach 1.0% these days.

How does this relate to Japan?

In the 1990's I became very interested in the Japanese economy. Some were calling the 90's Japan's "lost decade" because of its low economic growth compared to the 80's. If we look at the research and the numbers, we can see there was still economic growth in the 90s of around 1.0% for the decade. When you add in that Japan, at the time, was the second largest economy in the world, that is/was still a lot of economic activity.

Japan used to be a long term growth and not just one quarter projections, but growth for the future, not just investor mandated growth expectations.

Even in the 2000's Japan has remained at the 1.0 to 1.5% level range for economic growth.

I often observe and see, Japan's economy is still one of the most stable economies in the world, despite the media hype about investors wanting higher growth, the BOJ wanting higher inflation and so on.

I think the problem is investors, companies, stock market watchers, get too used to thinking they always have to have a linear progression or upward GDP economic growth. We lose sight of the idea that there is still a lot of economic activity taking place. Yes maybe not what is wanted or expected but the economy is still growing and the economy is still moving.

This is not to say, there should not be more economic growth, but that the idea of so-called modest economic growth should not be looked at as economic failure of an economy or society.


© 2020 Tom Metts,  all rights reserved