Japanese Economy News:

 https://mainichi.jp/english/articles/20201125/p2g/00m/0bu/131000c 

Article:

TOKYO (Kyodo) -- The government on Wednesday retained its view that the Japanese economy is "picking up" in its assessment for November, but it also warned of downside risks from the global resurgence of coronavirus infections.

In its monthly report, the Cabinet Office downwardly revised its view of capital investment, among other components, with the pandemic clouding the business outlook. Meanwhile, the assessment of production was upgraded due to the gradual resumption of economic activity.

Ideas and Commentary:

The government, most governments, want to provide a positive outlook as much as possible. However, just what does "picking up" really mean? An economy is very complex and as such there are always positives and negatives even when an economy is growing. 

Not to be negative or pessimistic but "picking up" can mean one part is growing but there might be other parts still with challenges.  

Downside risks are always in an economy, but of course even more now. Especially as in recent weeks there have been a new wave, wave 3 of the virus situation.

Capital investment is very much dependent on business sentiment, meaning how businesses feel about now or the future. 

Businesses mostly likely are going to take a "wait and see" approach regarding future conditions. Economic and business conditions were showing signs of improvement during the summer but have don't seem to be a good.

The idea of production increases might be related to increases in global trade and we see some increases globally. But again with the recent surge in virus cases, production increases might begin to be challenged.

Article:

The economy "is still in a severe situation due to the novel coronavirus, but it is showing movements of picking up," the office said, using the same wording for the fifth straight month.

Looking ahead, it said the improvement will continue, but added that "full attention should be given to the further downside risks" to the domestic and overseas economies due to the pandemic.

The office issued similar warnings in March and April when the economy was under pressure from the initial impact of the pandemic. Japan declared a state of emergency in early April and fully lifted it in late May.

Ideas and Commentary:

Yes again governments wants to appear positive so they often choose words and phrases that signal something positive instead of always sounding negative. 

But again just what are those movements and where to be more specific. But to be fair to government reports, again an economy is a very complex organism, meaning you have some real positive movements in some parts of an economy and at the same time some real challenges in other areas of the economy.

So for example, we can have real positive movements in the production or manufacturing of cars as there is an increase in global demand but at the same time have some real challenges such as in tourism, airlines, and restaurants where consumer demand has really decreased because of the virus situation.

So anytime we see or hear some economic or business news we need to look at the big picture and really see what is happening in an economy. 

Article:

"Domestically, private consumption of food services and travel is facing such downside risks, while exports could be affected by resurgences of infections overseas, especially in Europe," a Cabinet Office official told a press briefing.

The evaluation of capital expenditure was cut for the fifth time this year. It is "decreasing recently," according to the office, which said last month that business investment was "showing weakness."

The report upgraded the view of industrial output for the first time in two months, saying it is "picking up." The official cited solid demand for cars both at home and abroad.

The report left its assessments of other major components unchanged, including private consumption which it said is "picking up".

Ideas and Commentary:

Its not a surprise that that domestic spending is down in food services and travel. I often check or look at the Haneda domestic arrivals and departure flights on the Haneda airport web page and I see many flights arriving and departing and some flights that are cancelled. 

But of course the question is what is the capacity of the flights; 10%, 30%, 50% etc of capacity? But at least they are flying, but of course we have to guess they are not at 100% capacity. I don't even bother to look at international flights as its too depressing.

ANA in the spring said they were not going to do layoff but instead a reduction in salaries and hours. But just recently they seemed to have changed their mind as the virus situation drags on.

However, as the news of potential vaccines are in the news, and Qantas in Australia has suggested that travelers in the future might have to have a vaccination before being able to travel.

Regarding the food industry, the virus has forced many food services places to think about changing their way of doing business and or adding more take out services and now even delivery services to meet the demand of consumers who don't want or can't go to food service places because of the virus situation.

Many places that didn't have delivery services have now expanded into delivery with new and innovative delivery companies that have begun since the virus situation as been on going.

In South Korea, for example, restaurants don't have to have their own delivery workers. All they have to do is to have an app from a delivery company, that comes to the restaurant, picks up the food order and takes it to the customer. 

Again capital investment is very dependent on business sentiment or feeling about the future. As the virus situation continues on businesses will continue to be pessimistic. 

However, what we've seen globally is a surge in stock markets and news about the possible vaccines globally beginning to show real promise. 

But the real question is how soon can the vaccines be used in each economy and then will we seen a decrease in the virus situations.

Businesses are not going to really feel positive until they know and feel consumers/customers whether business customers or family customers feel things are getting somewhat back to normal.

However, as I watch the Shibuya crossing everyday on YouTube if foot traffic is anything, people are out about about everywhere in Japan. 

But unfortunately the virus situation continues to surge, and even the Go To Travel program is not doing so good. 

Have a nice day and be safe!