TOKYO (Kyodo) -- About 84 percent of major companies in Japan expect the country's economy to grow in 2022, driven by recovering personal consumption amid hopes that the coronavirus pandemic will subside, a Kyodo News survey showed Sunday.
In the survey of 106 companies, including Toyota Motor Corp. and SoftBank Group Corp., 13 firms predicted the economy will be flat as people remain cautious about the pandemic. But none of the firms said it will contract.
Of the surveyed companies, 84 expect growth to be moderate in the year ahead, while five see a more solid expansion.
With multiple answers allowed, 91 percent of them that expect growth cited a pickup in consumer spending, followed by 64 percent predicting the unusual situation caused by the pandemic will return to normal, 35 percent forecasting that capital investment will rise, and 19 percent looking forward to a recovery in the U.S. economy.
Ideas:
This writing is later than the actual article and as such the virus situation in Japan has exploded. But its to early to tell how the 6th wave is going to affect Japan's economy.
But at the same time, an economy is very complex and as there are many different parts to an economy, all parts don't improve or grow exactly at the same rate.
So while the economy is expected to grow in 2022, its doesn't mean all sectors will have the same growth.
Even without the pademic a market economy always has some positives and negatives interacting at the same time.
Consumer spending has always been a major challenge for the Japanese economy. It could be related to the ageing society problem. It could be related to the lack of salary increases problem. It could be many factors. But consumer spending has never reached the level of some other advanced countries where consumer spending is 60 percent or more, while Japan is around 50 percent of its GDP.
Take away the pandemic and there might be some light at the end of the tunnel related to consumer spenidng. As reported, households are now holding record amounts of cash and securities which might be enoough to spur a consumer spending surge in the future, and get the Bank of Japan's goal of reaching the 2.0 percent level in consumer demand a little closer.
Capital investments are probably like households holding onto cash reserves, meaning companies most likely are sitting on a lot of cash and are now ready to start spending on capital investments.
Article:
The overall percentage of firms forecasting growth in the world's third-largest economy is up from the 74 percent in a similar Kyodo News poll a year earlier.
Prime Minister Fumio Kishida has vowed to minimize the spread of the Omicron variant of the coronavirus while moving swiftly to get the economy back on track.
The fifth wave of infections, which took place when Tokyo hosted the Olympics last summer, prompted the government to declare a state of emergency in a number of prefectures and urge people to refrain from making nonessential outings.
The lifting of the emergency on Oct. 1 has raised expectations that demand will get close to pre-pandemic levels among a number of industries, especially leisure-related ones such as travel and restaurants.
Ideas:
There is something about companies and forecasting growth measures in that as consumers and companies and whomever begin to hear and see some positives about the future, then it might create a muliplier effect meaning as companies feel good then other companies feel good and begin to have more economic activity such as investment spending.
The same might be said for consumers. As they see and hear some positives about now and the future then the muliplier effect creates more and more consumer spending and economic activity. As consumers here good things, they get out and do things, and then as other consumers hear more good things they get out and spend and so on.
But its looks like the 6th wave is here and its even more than the delta 5th wave. But there might have been some good news out of South Africa, which said its looks like the omicron version has peaked and cases are decreasing just after 8 weeks when it was first detected.
So if there is any slow-down in economic activiity it might be a short-lived slowdown and maybe will not affect the Japanese economy that much or not as before.
Some industries might get near the pre-pandemic levels in 2022, but most likely not in Q1 has the surge in cases might cause a temporary slow-down and hopefully by Q2 the 6th wave will have passed.
The services sector is the one industry that has had the most challenges the past two years. And just when they thought they were getting back to some kind of normal, the omicron surge has hit and emergency measures are now being introduced again, which is going to have an affect on the services sector.
Article:
Japan has not yet seen a sizable boost in economic activity compared with the United States and Europe, where so-called revenge spending is conspicuous.
Meanwhile, among the 13 firms that expected the economy to be flat, rising material costs, sluggish consumer spending and increasing COVID-19 infections were the major reasons.
One company in the food industry said, "Coronavirus countermeasures are still insufficient, and it will take time for (the economy) to return to pre-pandemic levels."
The number of new COVID-19 cases has stayed low in Japan following the fifth wave on the back of progress in vaccinations. But community transmissions of the Omicron strain have been reported in some areas, raising fears over another surge in infections.
Ideas:
Over the last 20 years Japan has not seen lavish spending that occurs in the US or Europe. Maybe mostly because Japan's consumer spending level is not near what is seen in the US for example. Except for the maybe the 80's in Japan, households just don't have the same spending habits as US consumers.
Whomever came up with the term " revenge spending" is interesting. Another term might be pent up demand, latent demand meaning consumers have waited to spend and now want to get out and about and spend what they can.
Of course similar actions/activities took place in Japan in the Q1 of 2014 and Q3 in 2019. Because both times consumers knew that the sales tax was going to be increased from 5 to 8 percent and then from 8 to 10 percent. As such Japanese consumers might have gone on a spending frenzy period meaning they were buying things before the sales tax increases whent into affect.
As a freguent traveler to Japan, being there in September of 2019 and being in Yokohama and Yokohama station and the thousands of shops, it seemd like a spending frenzy as most stores and shops had pre-sales tax sales and consumers were everywhere in Sogo and Takashimaya, and the thousands of stores. Of course it was during the 2019 World Rugby tournamant, and as the Japan team was doing very good, maybe customers/consumers were feeling good and out and about spending a lot.
At the same time increases in supply costs might keep the growth of some companies lower than expected or wanted along of course with pandemic that again as exploded in Japan.
So it remains to be seen just what is going to happen in Q1 in the Japanese economy, as it seems companies and maybe consumers too were ready for a return to getting back to the pre-pandemic level or getting back to reaching that level.
Article:
Consumers in Japan have also continued to tighten their purse strings as prices of some daily supplies have been hiked due to rising raw material costs and the weakening of the Japanese yen.
Among Kishida's major policy items, the Kyodo News survey found that 54 percent of the companies backed the promotion of digital transformation.
Kishida's push for renewable energy followed with backing from 48 percent.
Ideas:
Consumers in Japan have always tightened their purse strings compared to consumers in other countries. But this time there might be some reasons to continue to not spend like they want or need. For example inceases in gasoline prices, increases home energy prices, increases in supermarket prices, and maybe increases in restaurant prices might have discouraged some consumers from getting out and spending.
All of these things put a constraint on consumer spending as their extra income or disposable income is now even less and as such they might refrain from doing anything beyond spending on daily or weekly needs.
However, has as been reported, households, maybe some but not all, are sitting on record levels of extra cash in the banks, and they might be a reason to be positive about consumer spending in the future.But again it must be remembered Japan traditionally has had one of the highest savings rates in the world and that doesn't always mean extra spending in the economy. I refrained from using the phrase correlate because its not a correlation as is often reported in many economic research reports
Digital transformantions and renewalbe energy are areas that Japan needs to look at carefully as the world is in a race now relatedd to renewable energy and digitalization.
Article:
Under the target of reducing carbon dioxide emissions to net zero by 2050, the government aims to have renewable energy account for 36 to 38 percent of Japan's total power generation capacity in fiscal 2030, more than double the 18 percent recorded in fiscal 2019.
Some 39 percent of the surveyed firms said they believe it is desirable for renewables to account for between 35 and 39 percent, while 20 percent said they think such energy should account for 40 percent or more over the total capacity.
Kyodo News conducted the survey between mid-November and early December. The 106 firms also include ANA Holdings Inc., Seven & i Holdings Co., Nintendo Co. and Panasonic Corp.
Ideas:
Renweable energy is the future, no doubt, but how soon can Japan society and the Japanese economy really see some tangible benefits. And what about the cost for businesses and households.
Unfortunately, nucluer energy is not a popular topic in Japan after 3/11. If Japan can find a way to use nucleur power in an efficient and safe way it might still be a realistice idea.
But land is always the challenge in Japan and where to have the plants is always a challenge. There is an ideas of making artifical islands that are tsunami proof away from the mainland for nucleur power plants.
Another source of renewable energy is heat at the core of the earth. If companies and governments can find ways to harness the heat generated by the earth's core, that might be a very reliable source of energy.
But only the future can tell which renewable energy or energies will emerge as the most reliable for societies and economies.
Have a nice day and be safe!
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