Japan Bankruptcies:

 https://mainichi.jp/english/articles/20210227/p2g/00m/0bu/035000c

Article:

TOKYO (Kyodo) -- The number of coronavirus pandemic-induced corporate bankruptcies in Japan reached a monthly record of 126 in February, with the restaurant and apparel industries hardest hit, a survey by a credit research company showed Friday.

The cumulative number of such bankruptcies since the start of the novel coronavirus outbreak in the country in February last year stood at 1,108, Tokyo Shoko Research said.

With many companies staying afloat by relying on public support measures, pandemic-induced corporate failures could start increasing at a faster pace, it said.

Of the cumulative bankruptcies, eating and drinking establishments made up the largest portion at 194, with such businesses in prefectures subject to the state of emergency hit by restrictions on operating hours and calls for residents to refrain from nonessential outings.

In January, Japan declared a state of emergency covering some prefectures and the restrictions remain in place for 10 of them.

The apparel industry including clothing manufacturers and retailers saw 102 bankruptcies, followed by the construction industry with 97 cases. There were 68 bankruptcies in the accommodation industry.

By region, 271 bankruptcies were filed in Tokyo, followed by 106 cases in Osaka.

Ideas:

Its very unfortunate that any business as the fail during the pandemic much less in normal times.

It would be good to know just how much more in terms of public support or subsidies would have been needed to help these businesses survive?

Most likely the 60,000 yen that was provided really didn't cover much when you consider if the eating and drinking establishments maybe lost anywhere from 4 to 5 hours each day because of having to close at 8 or 9PM when they might usually stay open to midnight or even 1AM.

While the larger establishments most likely had the resources or a reserve to survive the pandemic, maybe many of the smaller places didn't have much in reserves and were also working on very slim profit margins each night.

So even before the pandemic they are always aware of how slim their profits margins were and any cut in hours or sales would have a larger affect on them than the larger places.

As far as clothing manufacturers and retailers most likely the loss of sales in brick and mortar stores because of the increase in online shopping and or customers just not going to places they used to go to before the pandemic.

But also there has been the criticism that the clothing stores and other places were not getting the same public support or the 60,000 yen subsidy that the restaurants and bars were getting and as such had no support to survive.

And even hotels in the accommodation industry which is a large part of the tourism industry both domestic and international as the tourism industry in Japan has virtually been all but shutdown.

Its interesting about the construction industry having challenges during the pandemic. But at the same time its not surprising that all sectors and businesses have had challenges during the pandemic.

Have a nice day and be safe! 

JAL Employment:

 https://mainichi.jp/english/articles/20210226/p2g/00m/0bu/022000c

Article:

TOKYO (Kyodo) -- Japan Airlines Co. (JAL) said Thursday it will slash its hiring of new graduates in fiscal 2022 by 90 percent from the number that joined JAL group companies last spring, as the coronavirus pandemic is expected to continue putting pressure on travel demand.

The group will hire only 200 new graduates and forgo the recruitment of cabin attendants for its main carrier Japan Airlines in fiscal 2022 starting in April next year, while it will maintain employment of candidates for pilots and people with disabilities.

JAL, which has cut its international flights by around 80 percent, said in a statement it remains difficult to predict when the pandemic will be contained.

The JAL group hired 2,315 new graduates in fiscal 2020 and initially planned to hire some 1,700 in fiscal 2021.

But it halted recruitment activities in the middle of the year in the wake of the pandemic and decided to hire only 200 new graduates in the 2021 business year.

JAL rival ANA Holdings Inc., a parent company of All Nippon Airways Co., is also likely to hire only 200 new graduates in fiscal 2022, after usually taking on around 3,000 each year.

Ideas:

Its not surprising that JAL has decided to reduce it hiring for fiscal 2022 and the end of the pandemic is still not seen or unknown.

But at the same time its good that JAL has not indicated any real layoffs of its employees and or are not talking about it.

There was an article that mentioned that some JAL employees, flight attendants, were lent out to other companies as a way to keep them employed.

Last spring or early summer JAL or ANA had a flexible plan to reduce the work hours and or the salaries of some employees without actually laying off workers.

Yet when 80 percent of international flights are cut its hard to maintain the workforce even if you have good intentions.

However, as has been reported elsewhere, Japanese companies sometimes will keep the salaries somewhat low in order to build up some kind of reserve, to keep employees employed when the company hits some challenges such as the pandemic.

So maybe in that way JAL and ANA are able maintain most of their workforce without massive layoffs.

If you examine the Haneda International airport webpage and see the departures and arrivals for the domestic terminals or in Japan, you can see many cancellations but still a lot of planes departing and arriving. 

So while the international flights might have been cut, there are still a lot of departures and arrivals. 

But the questions is how full are those flights?

Talking to some Japanese who had taken flight for example from Haneda to Fukuoka and or Fukuoka to Haneda the flights appeared to be completely full.

Of course that might just be for the larger cities in Japan and not if the flights are to smaller regional type airports.

But then there is the question of what will the overall travel industry or just the domestic industry look like now with the use of online meetings between companies and clients instead of actually going to a company or traveling to another city for negotiations and other things?

That same maybe can be said for the shinkansen industry in Japan if more meetings are going to be taking place online instead at a business.

Have a nice day and be safe!

Japan GDP in 2020:

 https://mainichi.jp/english/articles/20210215/p2g/00m/0bu/035000c

Article:

TOKYO (Kyodo) -- Japan's economy contracted 4.8 percent in real terms in 2020 from the previous year, the second sharpest margin of contraction on record given the impact of the novel coronavirus pandemic, government data showed Monday.

Real gross domestic product, the total value of goods and services produced in a country adjusted for inflation, marked the first decrease since it shrank 5.7 percent in 2009, the biggest contraction since data began to be compiled in 1955, according to the preliminary data released by the Cabinet Office.

The negative growth in 2009 was logged in the wake of the global financial crisis.

Ideas:

What really does a 4.8 or a 5.7 decrease really mean? The real question to be asked it how did it affect the average person or the average family or the average small business?

Its easy and needed to show what happened or what is happening but even more important is what does the average family or average business feel or think when they hear or see those statistics?

If the average person or family or business doesn't feel much of an affect then most likely the numbers don't really mean much.

But of course if they know those who are were/are affected by the contraction then they might have some kind of feelings about it.

But then there is the overall affect on consumers in an economy if they constantly hear news about how the economy is doing then they might begin to not feel so good themselves and their future etc. and maybe begin to think about how much they are spending or using in the economy.

Article:

Last year, private consumption fell 5.9 percent mainly due to stay-home requests under the government's nationwide state of emergency over the virus in spring.

Many major cities abroad entered hard lockdown, dampening demand for products such as cars and reducing Japan's exports by 12.3 percent.

On a quarterly basis, meanwhile, GDP in the October-December period grew a real 3.0 percent, or an annualized 12.7 percent, from the previous quarter as the world's third-largest economy continued to experience a strong recovery from a pandemic-induced slump.

Ideas:

Last spring it seemed globally the whole world was on pause and not sure what do to or what was going on.

By the time the summer came along consumers around the world began to wake up and began to get back to some kind of movement or consumer spending.

And by the time to fall came around it seemed most countries were getting back to some kind of "new normal" spending behavior, or so it seemed at the time.

Japan's exports in the spring last year took a big hit but as global consumer began to get back to some kind of "new normal" exports mostly like started to gain steam again in the fall.

Article:

Following an annualized 22.7 percent expansion in the previous three-month term, GDP grew by double-digit percentage for the second straight quarter, after the virus emergency caused it to shrink an annualized 29.3 percent in the April-June period, the largest on record.

Looking forward, many analysts predict Japan will post negative growth in the January-March period again, as Tokyo and nine other of the nation's 47 prefectures are currently under a second emergency amid a third wave of virus infections.

Ideas:

As a possible third wave has taken affect just how much will it dampen consumer spending in Japan an or overall economic growth in Japan remains to be seen.

As I listen to and survey those in Japan, it seems sometimes they say, some people have forgotten about virus already, as many stores and coffee shop seemed completely full.

So even if people/consumers are out and about how does that translate to consumer spending. 

Of course many are still working from home and not venturing back to where their offices are and of course the restaurants, conbinis, and coffee shops around the office buildings most likely are still not doing so good as before the pandemic.

Article:

The emergency, which Prime Minister Yoshihide Suga declared last month, is expected to end on March 7.

In nominal terms, or unadjusted for price changes, the economy shrank 3.9 percent in the reporting year, but expanded an annualized 10.5 percent, or 2.5 percent quarterly, in October-December.

The Cabinet Office is scheduled to release revised annual and quarterly GDP data on March 9.

Ideas:

Once again, talking to those in Japan etc. it seems even though there is/was a so-called lockdown many people/consumers were acting like it was back to normal as many people were out and about as spring was approaching.

Of course many if not all restaurants and other places had to sill close by 8 or 9PM meant they were/are still losing a lot of sales and mostly likely many of the small restaurant places get most of their sales in the evening.

If they have to close by 8/9PM and normally they stay open to 1/12 then they are losing 4/5 hours of sales because of the lockdown.

And the 60,00 yen that the government is providing might not be enough to cover 28 hours a week of lost sales.

Yes its important for the government to do what it thinks is needed but at the same time real businesses and real people are having challenges related to the lost business hours.

Have a nice day and be safe!

Japan 4th Quarter Growth:

 https://mainichi.jp/english/articles/20210210/p2g/00m/0bu/117000c

Article:

TOKYO (Kyodo) -- Japan's economy in the October-December period likely grew an annualized real 7.97 percent from the previous quarter buoyed by a strong recovery of exports following a coronavirus pandemic-caused slump, market forecasts showed Wednesday.

The forecast for the fourth quarter of 2020 by economists at 36 private-sector think tanks corresponds to a 1.93 percent expansion on a seasonally-adjusted quarterly basis, growing for the second straight quarter, according to the Japan Center for Economic Research.

Ideas:

Most likely many economies around the world saw an increase as consumers felt more comfortable getting back to some kind of normal economic activities.

Exports most likely were of course driven by the global demand for Japanese cars. While in the spring and early summer of 2020 global consumers were not sure what was happening and were mostly likely to see what was going on

While the same time, domestic consumers were most likely tired of being inside and not going and an naturally began to spend more even if was just online shopping and buying.

Article:

The growth is largely due to exports of goods and services estimated to grow 9.06 percent, according to the average projection, as economic activities restarted gradually after the first coronavirus state of emergency in Japan was fully lifted in May.

The projection also showed that the country's gross domestic product in 2020 shrank a real 5.06 percent from 2019. It will be the fastest contraction since it fell 5.4 percent in 2009 in the wake of the global financial crisis.

For the current January-March term, the economy is forecast to shrink an annualized 5.47 percent, as the government declared its second state of emergency for Tokyo and some other areas last month, amid the third wave of virus infections. It was initially set to end last Sunday, but was extended by one month.

Ideas:

An economy doesn't get back to normality immediately so maybe it took until the Fall for most economic activities to see some kind of normalcy.

While a decrease of 5.06 is not good, Japan maybe was lucky that it wasn't worse.

But at the same time, Japan's economy maybe was more resilient than some other economies.

The reason being, Japan has had a somewhat stable economy compared to other economies in that while it no longer grows at +3 percent each quarter or even each year it remains in the 1+ percent range most of the time and or even just 0.5+. 

While not good, when you consider the amount of economic activity for the 3rd largest  economy a 0.5+ growth is still a lot of activity.

Even if the economy decreases 5.47 percent for the January-March term, we have to look at the big picture.

Yes there are some areas of the economy not doing very good but that doesn't mean all activity is shut down. There is still a lot of activity taking place even with a  -5.47 percent decrease.

And yes there are many businesses not doing too good but there also might be many businesses still surviving with business somewhat as usual.

Article:

The Cabinet Office is scheduled to release preliminary data on the latest quarterly and annual GDP figures on Monday.

Japan's economy contracted an unprecedented annualized 29.2 percent in the April to June period, after the first state of emergency was introduced in April last year and prompted people to refrain from nonessential outings and businesses to suspend operations.

With the economic restart, the world's third-largest economy showed a sharp rebound in the July-September quarter, growing an annualized 22.9 percent.

The economists forecast that GDP in the April-June period in 2021 will expand an annualized 5.76 percent.

The survey was conducted from Jan. 29 to Feb. 5.

Ideas:

And again while the economy is expected to grow 5.76 percent in the April to June period that doesn't mean all sectors and businesses will grow 5.76 percent. 

An economy is very complex and always in a state of movement. Sometimes sectors and businesses having good quarters and some sectors and businesses not so good quarters of growth.

And with the pandemic still around there still might be many businesses, especially the tourism and restaurant sectors not even getting close to 5.76. 

If they even reach 0.5 percent of economic growth they will most likely feel they have survived.

It most likely could take all of 2021 for the full economy to feel it has gotten back to some kind of "new normal" if even in 2021 for some again such as the tourism industry.

Have a nice day and be safe!

Japan Wholesale Prices:

 https://mainichi.jp/english/articles/20210210/p2g/00m/0na/056000c

Article:

TOKYO (Kyodo) -- Japan's wholesale prices dropped 1.6 percent in January from a year earlier due largely to lower crude oil prices and electricity bills, the Bank of Japan said Wednesday.

The prices of goods traded between companies fell for the 11th straight month amid the prolonged impact of the novel coronavirus pandemic.

Prices for oil and coal products tumbled 14.7 percent with a slow recovery in crude oil prices amid the pandemic, while electricity, gas and water bills dropped 11.9 percent, reflecting lower energy costs last summer.

Ideas:

Higher or lower wholesale prices sometimes might be an indicator or higher or lower prices overall for consumers.

As sometimes, most likely with higher wholesale prices, companies will "pass on" the higher prices they have to pay and charge retail consumers higher prices to cover their costs.

Except of energy, rarely do wholesalers pass on the lower prices they have to pay to consumes as they want maintain a certain to consumers and maintain a certain profit margin.

Prices or goods traded between companies can be seen as less business between companies do due the pandemic as maybe intermediate products were not as needed to to pandemic.

Article:

"The U.S and Chinese economies have been picking up recently, but we still see the impact of the pandemic continuing to put pressure on overall prices in Japan," a BOJ official said.

Nonferrous metal product prices rose 12.6 percent as demand for aluminum and copper grew following a recovery in the Chinese economy.

Prices for scrap and waste surged 42.7 percent as overseas demand for steel products increased amid improvement in global auto sales.

Ideas:

As global demand continues to improve Japanese companies might see a surge in demand for the types of products they produce.

Which can have a further synergy affect. As demand for products of some companies begin to improve it will affect the demand of products they need to make the products. So what happens to one company can affect many companies such as suppliers to companies.

Just as no country or economy is isolated in today's global economy as most economies are very interconnected the same can be said for many companies in an economy as many companies are very much interconnected with each and especially in Japan.

Article:

Meanwhile, agricultural, forestry and fishery product prices slipped 1.5 percent as restaurants and bars cut operating hours at night in 11 prefectures where the government declared a state of emergency in the reporting month due to a resurgence of virus infections.

Import prices fell 8.2 percent and export prices decreased 1.0 percent, both in yen terms.

Ideas:

As just mentioned many sectors and companies in an economy are interconnected and what happens in one area can have a large affect on other sectors or industries in an economy.

As restaurants and other places were forced or told to close earlier meant less sales, less profits and then for their suppliers less demand for the products they produce.

And again another negative synergy affect as what happens with one sector/industry in an economy can have a large affect on other sectors or industries within an economy.

In terms of imports prices, how much of the decrease was related to lower oil prices that Japan imports for use in the economy?

Have a nice day and be safe!

Japan Automaker Honda To Cut Sales Outlook:

 https://mainichi.jp/english/articles/20210209/p2g/00m/0bu/100000c

Article:

TOKYO (Kyodo) -- Honda Motor Co. said Tuesday it has cut its global auto sales outlook by 100,000 vehicles for the January to March quarter due to a global semiconductor shortage.

The Japanese automaker revised downward its sales projection for the year to March 2021 to 4.5 million vehicles from the previous estimate of 4.6 million.

Global automakers including Toyota Motor Corp. and Volkswagen AG have suffered from the chip shortage since late last year with their production being briefly halted, although auto sales rapidly recovered in some major markets such as China and the United States.

Ideas:

The global ship shortage related to the production of car might be related to the surge in other products that also use semiconductor chips. 

Because most semiconductors most likely use the same or similar scarce raw materials there are not enough of the raw materials being produced to keep up with the demand for semiconductors.

Of course now because of the pandemic situation more tablets, notebook computers, and smartphones are being produced as people work from home and students take online classes using notebooks, PC's, tablets etc.

Article:

"The chip supply crunch has been gradually easing recently and we expect no impact in the next business year (starting in April)," Honda Executive Vice President Seiji Kuraishi said in an online press conference.

Kuraishi said the semiconductor shortage greatly affected the production of Honda's main models such as the Fit compact car in Japan and the Civic and Accord sedans in the United States.

Honda upgraded its full-year earnings estimates. But Kuraishi said that without the chip shortage, it could have projected better results for the current business year.

Ideas:

As more and more products such as cars rely on hi-tech components such as semiconductor chips and as the most semiconductors might use similar rare-earth raw materials, the idea of shortages might still be there for sometime until the demand for other products that use the same rare-earth materials begins to decrease.

A sales projection decease from 4.6 to 4.5 million vehicles should not be that much of a worry for Honda unless they are overly concerned with what stockholders think of a slight decrease in sales.

Even with a decrease in the sales projection, it the real numbers that really count. 

Companies can do all the sales projections they want but it all depends on consumer demand, despite possible decrease in supply because of the chip shortage.

Article:

The carmaker is now expecting a net profit of 465 billion yen ($4.4 billion) for fiscal 2020, revised from the previous estimate of 390 billion yen due to cost cuts and recovering motorbike sales in India and Indonesia.

It also forecast an operating profit of 520 billion yen, up from 420 billion yen projected in November.

Honda is reviewing its supply chains and considering increasing stockpiles of auto parts in a bid to reduce the impact on production even if a supply shortage occurs, Kuraishi said.

For the nine months through December, Honda's net profit fell 8.5 percent from a year earlier to 444.10 billion yen. Operating profit dropped 30.1 percent to 447 billion yen on sales of 9.55 trillion yen, down 16.8 percent.

Ideas:

So even with the chip shortage Honda is expected to increase its net profit, mainly to cost cutting measures and the increases in sales in some markets.

Lets hope, during this virus situation that the cost cutting measures were not a reduction of employees or workers who need a job during the pandemic or anytime.

And or there were no reductions in employee hours or a reduction in hourly wages because of the pandemic.

The idea of any company trying to increase their stockpiles would be a good thing as a way to ensure the production is always maintained as much as possible.

Japan's fiscal year is different from the calendar year so the 2020 fiscal year will end in March 2021.

While net profit might be 465 million yen, through the first nine months net profit was down 8.5 percent.

So either the cost cutting measures help improve net profit and or the late surge in sales in the fall and or in the three months of 2021 might help to improve overall net profit to 465 billion yen.

Of course overall global consumer demand in 2020 might have had an affect on the overall net profit of Honda.

Have a nice day and be safe!

Japan Overtime Pay:

 https://mainichi.jp/english/articles/20210209/p2g/00m/0bu/082000c

Article:

TOKYO (Kyodo) -- Average overtime pay in Japan in 2020 fell 12.1 percent from the previous year, the sharpest drop in 11 years, as the coronavirus pandemic forced many businesses to cut their operating hours, government data showed Tuesday.

The average stood at 17,352 yen ($165) per month, the Health, Labor and Welfare Ministry said in a preliminary report that covered workplaces with at least five workers. The pace of decline was the fastest since 2009 when the global financial crisis and economic downturn caused a slide of 13.5 percent.

By sector, the average plunged 33.5 percent among livelihood services such as hair salons as well as the entertainment industry. Restaurant and hotel operators marked a 27.3 percent fall while manufacturers saw a 19.5 percent drop.

Ideas:

Overtime is always welcome by most workers. Its provides for some extra income which might be used related to consumer spending or even meeting daily necessity needs.

But more importantly it can have a synergistic affect meaning as workers get the extra income from their places of work and then they use it at other businesses, who then get extra sales, and then their workers keep the jobs and or get extra income as needed and it goes on in an economy.

The idea that some businesses can go to close early means their workers lost out on extra income and then other businesses and their workers might have lost out on extra sales and or extra income.

So any time there is are the emergency measures, which of course are most likely needed it has a negative synergy affect meaning not only is it reducing sales and extra income for one group and then it affects other groups in an economy and society.

Article:

Monthly overtime hours of all workers fell 13.2 percent on average for 2020, also the biggest decline since a 15.0 percent decline in 2009.

The average total cash earnings per worker, including base and overtime pay, fell 1.2 percent last year to 318,299 yen on a nominal basis for the second straight year of decline.

The survey also showed that part-timers made up 31.14 percent of the country's workforce last year, down 0.39 point from 2019 and the first decrease since the survey began in 1990, as the pandemic seriously damaged the service sectors, which employ many nonregular workers.

Ideas:

An increase in part-time workers seems to be a global trend ever since the 2208/2009 global financial crisis as companies are relying more and more on part-timers as a way to reduce cost.

The major challenge related to this is like above. These part-timers don't receive the same salary as a full-time worker and as such have less to spend in the economy, or less disposable or extra income.

Many of these part-time workers might even be working two or three part time jobs just to make ends meets.

So while companies might think they are saving money by not paying full-time salaries to these workers and saving on reduced company benefits it too has a negative synergistic affect in that there might be less disposable income available in the economy or less money moving through the economy which reduces overall demand and might have the affect of increasing the chances of deflation growing even more which the Bank of Japan is worried about.

Have a nice day and be safe!

Japan Govt. Subsidies:

 https://mainichi.jp/english/articles/20210209/p2g/00m/0na/052000c

Article:

TOKYO (Kyodo) -- Prime Minister Yoshihide Suga's Cabinet decided Tuesday to disburse 1.14 trillion yen ($11 billion) from reserve funds for fiscal 2020, mainly to increase subsidies for coronavirus pandemic-hit sectors following a one-month extension of the latest emergency declaration.

The funding includes 880.2 billion yen to be given to local municipalities so that they can offer financial aid for restaurants and bars that comply with requests to close early, with state subsidies of up to 60,000 yen per day available.

Ideas:

Subsidies are a very needed resource now for many businesses. And for many it might not be enough. 

Most likely there needs to be some kind of subsidy for as long as it takes until the vaccines are finished and or the number of cases are a very very low level.

Most likely 60,000 yen might help some but maybe not all.

Article:

Food service operators have been asked to stop serving alcohol by 7 p.m. and close by 8 p.m. under the government's second state of emergency declaration, which was extended to March 7 for 10 prefectures.

The state of emergency, declared for the Tokyo metropolitan area on Jan. 7 and later expanded to Tokyo, Osaka and nine other prefectures, was originally scheduled to end last Sunday.

But it was extended by a month as hospitals remain under pressure despite declining coronavirus cases, with Tochigi Prefecture the only area to have the order lifted.

Ideas:

It might be a good incentive for some businesses who can afford to do so and the subsidy might not be a problem for them, but for other businesses the subsidy might not be enough to offset the loss or sales.

If the bulk of restaurant's business is between 8 and 12 at night potentially that is a lot of lost business. 

And if they don't get much business during the late afternoon or early evening that is a problem for many.

Article:

For businesses such as those supplying chopsticks and hand towels to dining and drinking establishments, 249.0 billion yen was earmarked for one-off benefits.

The suppliers can receive up to 600,000 yen, increased from the initial upper limit of 400,000 yen following the emergency extension, if their sales fell remarkably from the previous year.

To conduct monitoring surveys including polymerase chain reaction tests at emergency-targeted areas after the declaration was lifted, 8.1 billion yen was set aside.

The government has set aside a total of 11.50 trillion yen in reserve funds for the current fiscal year through March to be used in response to the pandemic. Following Tuesday's Cabinet approval, 2.68 trillion yen remains in the funds.

Ideas:

The government subsidies, as much as possible should be based, on actual documents showing losses from pre-pandemic to the current situation.

If the government, without a lot of extra paper work, and have businesses show much they have lost in sales then the government maybe can provide a certain percentage of lost sales in some kind of subsidy to help companies survive.

It might not be possible to cover all the losses but the government should set up a plan, if they haven't already to cover as much as they can to help businesses get through the pandemic.

This is not the time to say "let the market decide" who survives and who doesn't. This is the time for government action, as much as possible and also not worry about any extra debt at this time.

Have a nice day and be safe!

Japan Travel Balance:

 https://mainichi.jp/english/articles/20210208/p2g/00m/0bu/046000c

Article:

TOKYO (Kyodo) -- Japan's travel surplus in 2020 shrank to nearly one-fifth of the previous year, the first drop since the balance turned into the black in 2015, as international travel bans amid the coronavirus pandemic had a huge impact on the number of inbound visitors, government data showed Monday.

The travel balance, which reflects the amount of money foreign visitors spend in Japan versus Japanese spending abroad, tumbled 79.2 percent to 562.1 billion yen ($5.3 billion) from a record 2.70 trillion yen in 2019 since annual comparable data became available in 1996, the Finance Ministry said in a preliminary report.

Ideas:

The travel balance results should not be a surprise considering the ban on foreign travelers not allowed into Japan from March 2020.

In 2019 was the Rugby World Cup so that was bonus alongside the large numbers of Chinese tourists who were visiting Japan at that time.

I visited Japan, mainly Yokohama 4 times in 2019 and it did seem like a big year for tourism in Japan.

I was in Japan during the Rugby World Cup, not for that reason, but other reasons, and the atmosphere seem very alive at the time. I was an exciting time to be in Japan before the pandemic hit sometime later.

Article:

Still, Japan's travel balance in 2020 logged black ink for the sixth straight year. In 2015, the balance saw its first black ink of 1.09 trillion yen since data compilation began in 1996, following a 44.4 billion yen deficit marked in 2014.

Since 2011, when a massive earthquake, tsunami and the subsequent Fukushima nuclear crisis in northeastern Japan helped slightly widen a travel deficit to 1.30 trillion yen, the country's annual travel balance had continued to improve until 2019 with a steady increase in the number of foreign visitors.

Ideas:

Part of the travel balance being in the black stems from the Abe government's plan at the time to use tourism as a way to help the economy.

So six years of being in the black, meaning more spending by tourists in Japan compared to Japan tourist spending overseas has got to be a good thing for the Japanese economy.

And of course most of that spending was/is from Chinese tourists spending a lot on Tokyo etc.

There must have been even in January and February of 2020 a lot of Chinese and Korean tourists to keep the travel balance in the black.

And of course after March most likely very few Japanese tourists traveled outside of the country.

Article:

The reporting year's surplus in the current account, one of the widest gauges of international trade, fell 13.8 percent from 2019 to 17.70 trillion yen, its lowest level since 16.52 trillion yen recorded in 2015. It had increased 5.8 percent the previous year.

In 2020, the goods trade balance saw a surplus for the fifth consecutive year, jumping almost eight-fold from the previous year to 3.05 trillion yen.

The impact of a 15.0 percent decline in imports due to falls in prices of crude oil and other energy resources surpassed that of an 11.4 percent slip in exports amid sluggish demand for Japanese products such as cars and auto parts due to the pandemic.

Ideas:

The current account balance obviously fell due to a decrease in Japanese exports to other countries and demand for Japanese decreased.

But you can probably say not just Japanese exports, but also Korean exports, Chinese exports etc. as global consumer demand decreased a lot in the spring of 2020 and began to rise again in the later part of the summer of 2020.

The surge in global demand in the later part of the summer and the fall probably helped Japan and the global economy from being even worse.

For example the WTO expected world trade to decrease 9.2 percent in its October 2020 estimate but later it only decreased 5.3 percent overall in 2020.

Article:

With the poor performance of the travel balance, services trade, which also includes cargo shipping, marked a 3.54 trillion yen deficit, following the first-ever surplus of 124.8 billion yen in 2019. It was the biggest red ink since the 3.81 trillion yen logged in 2012.

The primary income balance, which reflects returns on overseas investments, showed a surplus of 20.72 trillion yen, the fourth largest since 1996, despite a 3.2 percent dip from a record 21.40 trillion yen in 2019, the first decline in four years.

Many countries have imposed sweeping travel restrictions in response to the global spread of infections after the virus was first detected in China in late 2019.

Ideas:

In the spring of 2020 there were many factors which affected Japan and overall world trade.

First was the travel ban around the world which virtually closed of international travel. 

Second was the affect on logistics and shipping during that same time period. There was almost no movement of cargo during that time or very little.

For example Amazon US seemed to have almost stopped shipping during that time and or said it would up to two months to get something from the US.

Then there might have been very limited if any shipping from UPS, Fed Ex, DHL etc.

And then of course the airlines were not shipping much as they were virtually paralyzed in what they could do during that time.

Most likely cargo shipping was also affected as everything was in disarray as to how to handle the virus situation. 

Third was the temporary shut down or closings of manufacturing businesses during that time.

Whether in China, Korea, Japan, the US or wherever, many factories were shut down due to some factory workers who had contacted the virus.

Article:

In 2020, 4.12 million foreigners visited Japan, which has promoted inbound tourism as a pillar of its growth strategy for revitalizing regional economies in recent years, plummeting a record 87.1 percent from 31.88 million in the previous year, according to the Japan Tourism Agency.

Japan was originally scheduled to host the Tokyo Olympic and Paralympic Games last summer, but they were postponed for a year amid the pandemic.

Largely consisting of tourists from China, South Korea and Taiwan, foreign visitors had kept expanding until 2019, when the figure hit a record high for the seventh year in a row.

In December alone, Japan posted a current account surplus of 1.17 trillion yen, more than double the previous year's 544.9 billion yen to mark the 78th straight month of black ink.

In the month, the country had a goods trade surplus of 965.1 billion yen and a services trade deficit of 343.5 billion yen. Primary income registered a surplus of 649.2 billion yen.

Ideas:

Most of the foreign visitors most likely again were in January and February or even early March before the travel bans were put into place.

What the figures do show, that despite the decrease in tourists the Japanese economy was still able to maintain a surplus in the current account balance most likely due to the late summer and fall surge in global consumer demand for Japanese products.

So even though exports might appear to be a small part of the Japanese economy, compared to domestic spending or consumer spending, it is still large enough to have an affect on the economy, in both positive and a negative way.

Thankfully consumer global demand increase for Japanese consumer products such as cars that the economy was able to maintain some kind of current account balance.

Have a nice day and be safe!