Japan Industrial Output:

 Article Source:  https://mainichi.jp/english/articles/20220228/p2g/00m/0bu/028000c

Article:

TOKYO (Kyodo) -- Japan's industrial output fell 1.3 percent in January from the previous month for the second straight month of decline due to disruptions in the supply of semiconductors and other parts amid the coronavirus pandemic, government data showed Monday.

The seasonally adjusted index of production at factories and mines stood at 95.2 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The result followed a 1.0 percent drop in December.

The ministry, however, retained its assessment of the data for the third consecutive month, saying output at factories and mines is showing signs of picking up on the back of a bright outlook for the near future.

Ideas:

Most likely there are going to be supply distruptions for a while. So companies need to adjust their production schedules and maybe learn to be more flexible.

It should be remembered that an economy is very complex, and as such not all companies might be experiencing the same level of problems, or not all companies might not experience the same level of challenges as some companies.

So we need to be careful that we don't paint all companies as having the same level of problems as other companies. And not think all companies are coming out of the pandemic, as again an economy is very complex meaning there companies that are doing very good, some that are just OK, and some might have some serious challenges.

Article:

By component, production in the auto industry marked the biggest drop of 17.2 percent, as the proliferation of the Omicron variant across the country caused disruption in domestic supply chains, a ministry official said.

Output in organic and inorganic chemicals also dipped 3.8 percent as the pandemic and an earthquake with a magnitude of 6.6 in southwestern Japan forced some plants to halt production in the reporting month.

For the upcoming months, the official said that "the coronavirus related situation and (the ongoing conflict in) Ukraine is likely to affect output," without providing further explanation.

Ideas:

Different sectors might be experiencing different levels of disruptions. But maybe even within different sectors there might be different levels of disrupdtions depending on the strength or weaknesses of a company's supply chain or supply chains.

By now, going into the third year of the pandemic, you would think that companies have been able to diversify their supply chains so that they don't experience a lot of supply chain challenges.

Of course no company could have predicted the latest earthquake and as such natural disasters are sometimes very difficult to plan around or overcome. 

Article:

On Thursday, Russia invaded Ukraine following a months-long military buildup on the border, prompting the United States, Japan and Europe to impose sanctions against Moscow, such as excluding some Russian banks from a key international payment system known as SWIFT, as well as freezing assets held by Russian President Vladimir Putin and other Russian government officials.

In the reporting month, the index of industrial shipments decreased 1.8 percent to 93.7 while that of inventories was down 1.8 percent at 99.0.

Based on a poll of manufacturers, the ministry expects output to rise 5.7 percent in February and edge up 0.1 percent in March.

Ideas:

The Ukraine war situation is going to effect many countries globally related to food prices, oil and gas prices along with the continuing shipping challenges are probably only to get worse over the next few weeks, months, or even years.

So we have had the continued pandemic and now we've got the war sitiuation which is going to effect all of the present challenges, increasing in food prices, increases in energy prices, and increases in shipping prices and shipping times.

Output might increase overall but again that doesn't mean all companies might not have the same level of output because of different challenges in different sectors and in the overall economy.

So it might not be the best time to say all is well just yet, and so maybe we are again heading into a "new normal" which now includes the war situation and not just the pandemic.

Have a nice day and be safe!

Japan Automakers:

 Article Source: https://mainichi.jp/english/articles/20220228/p2g/00m/0bu/059000c

Article:

TOKYO (Kyodo) -- Total domestic output by Japanese automakers in 2021 fell to its lowest level in 45 years, dropping 2.7 percent from a year earlier to 7.85 million vehicles, amid a supply shortage caused by the coronavirus pandemic, industry data showed Monday.

According to the Japan Automobile Manufacturers Association, total output in Japan decreased for the third straight year. The prolonged global semiconductor crunch could continue to hit the auto industry this year.

The figure is about 42 percent lower from its peak of 13.49 million units produced in 1990. Automakers may face difficulty in sustaining employment and maintaining factories if the level of output remains low.

Ideas:

Total output may have dropped but that's still a lot of vehicles being produced in a single year. Yes, most likely companies need to keep a certain level of output to keep profits high and to keep shareholders happy.

If they are always showing they aren't meeting their production targets and or not reaching the profit targets that shareholders want, then they can't attrack extra shareholder funding which they might need for the future.

Of course no one could have expected the global semiconductor shortage. In South Korea Hyundai and KIa have said their backorders now are over 1 million vehicles and it can take up to year to clear all of the backorders.

But a 42 percent drop from 1990 indicates there are many more players globally now. For example Kia and Hyundai in South Korea were just beginning to make their presence in the global market.

Article:

The industry data was compiled based on figures from eight major automakers, including Toyota Motor Corp. and Honda Motor Co., and four manufacturers of commercial vehicles such as Isuzu Motors Ltd.

Total output of passenger cars dropped 4.9 percent from 2020 to 6.62 million vehicles, but the data showed that those of trucks and buses increased. The output of trucks rose 11.2 percent to 1.15 million units, and buses increased 5.5 percent to 73,659.

Domestic production largely exceeded 10 million units between 1980 and 2008, but has been below that level since falling to 7.93 million units in 2009. The strengthening of the Japanese yen and the relocation of factories overseas have led to a decrease in domestic output.

Ideas:

As companies relocate to be closer to their global customers, they might be able to decrease shipping costs, reduce costs related to materials costs, and maybe offset the strengthening yen.

But at the same time it means maybe less workers in Japan and or maybe less good jobs for workers in Japan, as maybe even Japanese companies chase lower wages in other countries too.

So the domestic manufacturing auto market is not the same it was in 1990 or even 2009, as companies expand globallly with more production plants in other countries and less and less each decade in Japan.

Article:

Among the eight major automakers, Mitsubishi Motors Corp. was the only one that saw an increase in output.

According to the data, oversees output stood at 16.46 million units in 2021, a 7.1 percent rise from a year earlier and the first increase in three years, amid recovering demand in the United States and other markets.

Ideas:

Its possible Mitsubishi and its production plants might not have had the shutdowns related to the pandemic or shortages that other vechicle companies did.

During the pandemic in 2020 and 2021 most likely consumers were waiting to buy a new car and the pandemic had cause a lot of problems for consumers/customers everywhere.

But at 2021 continued on consumers maybe began to feel better and demand for a new car increased globally.

But of course there was and is the chip shortage that might have effected some car manufacturing more than others.

As the example for South Korea's two largest car manufacturers. Japanease companies too might be experiencing a significant increase in backorders due to the chip shortage.

As the chip manufacturing plants were hit with pandemic problems of shutdowns, and then with shortages of supplies needed to produce the chips, then these challenges have moved over to car manufacuring companies because chip factories most likely are still trying to fill backorders which of course means car companies are unable to produce as many cars as they want or need which then transfers over to customers/consumers who might not be able to get their new car for up to a year.

Have a nice day and be safe!

Japan Govt. Economic View:

 Article Source:  https://mainichi.jp/english/articles/20220217/p2g/00m/0bu/054000c

Article:

TOKYO (Kyodo) -- The Japanese government on Thursday downgraded its economic outlook for the first time in five months, reflecting weakness in private consumption amid a resurgence of coronavirus infections led by the highly transmissible Omicron variant.

The Japanese economy "continues to show movements of picking up, although some weaknesses are seen as a severe situation (of economic activities) due to the novel coronavirus remains," the Cabinet Office said in its monthly assessment report for February.

The report last month said the economy "shows movements of picking up recently as the severe situation due to the novel coronavirus is gradually easing."

Ideas:

The Japanese economy, like many economies, are not going to get back to any kind of real normalcy for a while. For example, just look at what is going on in China right now with outbreaks of the omicron virus in different parts of China.

For example some areas or sectors related to the Japanese economy are not going to come back soon until the economy can get back to the pre-pandemic level, and that is not going to happen until the services sector can get back to some kind of new normal.

For example tourism is not where it should be and international toursim, as of this writing is not even existent at the time.

There is aslo still the idea that maybe some citizens might still be reluctant to do what they used to do before the pandemic started. So its going to still take time before everyone feels good about going out and doing what they did before the pandemic situation.

Article:

The latest report said attention should be paid to a potential "further increase in downside risks" from the spread of infections, citing supply-side constraints and higher raw material prices, as well as the effects of fluctuations in the financial and capital markets.

An official who briefed the media on the report said, "We continue to regard the situation in Ukraine as a downside risk" as it impacts raw material and oil prices amid fears over a Russian invasion following its massive military buildup near the Eastern European nation.

By component, the office revised downward its evaluation for private consumption for the first time in five months since September, saying it "appears to be pausing for picking up recently." The previous assessment said it "shows movements of picking up."

Ideas:

Supply-side contraints are not just in Japan but is notw a global problem, and will continue to be a problem for a long time. Raw material costs are continuing to increase which might mean Japanese companies will have no choice but the pass on their increased supply costs to the next in the supply chain, which means it might eventually reach the final link or the consumer.

And then add in the fluctuations in the financial and capital markets and it seems that all economies globally are in a state of confusion and not in very steady situation at the moment or maybe not even in the near future.

And of course the Ukraine situation doesn't make any of the markets feel good at this point which could cause a lot of volatility.

Consumer spending or private consumption is always an up and down situation in Japan, meaning consumer spending is always a challenge for the Bank of Japan and its target of reaching the 2.0 percent level.

But it needs to be known that right now it seems supplier inflation or supply inflation might reach the 2.0 percent if it hasn't already because of the increase in material and energy costs.

Article:

Of Japan's 47 prefectures, 36 including Tokyo and Osaka remain under a quasi-state of emergency over the spread of the Omicron variant. As the measure entails restrictions on establishments, such as shorter business hours and a ban on serving alcohol, it tends to dampen consumption in target areas.

Consumer sentiment was dampened by the quasi-state of emergency and the number of people visiting commercial and entertainment facilities has been on a downward trend since January, the report said.

Looking at trends in people's credit card spending, service spending, including that on dining, hotel stays and travel, dropped across the board in late January, the official said.

Ideas:

Most likely the quasi-state of emergency might cause some to not go out but at the same time, at this point in the pandemic, some might have decided to ignore or not worry about the omicron situation and go out and do what they want anyway.,

Also, as the government can't really enforce the state of emergency its possible that some restaurants have decide to stay open late and maybe continue sell alcohol as their rational has has been we can't survive it we can't stay open late or serve alchohol.

Consumer sentiment, or feeling is always an up or down situation, meaning the feelings of consumers are always up or down. But that doesn't mean they aren't going to spend or go out and do things, its just might mean they don't feel good about a situation, which is much different.

The Bank of Japan or the Japanese government can do all kinds of consumer sentiment surveys they want and people/consumers might say one thing on the survey and then the next week to the complete opposite as people are people and they change their minds a lot.

There are around 125 million people in Japan and just because there is a reported trend doesn't mean everyone is doing the exact same thing. There might have been a drop in card spending or service spending but that doesn't mean everyone stopped spending or going to restaurants during the omicron period.

Article:

The report said business investment "shows movements of picking up," an upward revision from the previous report that said it "appears to be pausing for picking up."

The official said the revision reflects a recovery in software investments following a drop during the previous wave of infections last year.

Assessments of other major components were unchanged. The office said that exports are "almost flat," and industrial production "shows movements of picking up."

Ideas:

Business investments are never a linear progression, as there are always periods of investments, periods of pausing, and even periods of no investments at all, as business sentiment is always based on what businesses feel is the best time to invest or not invest.

Some might think exports being "almost flat" might a bad thing but being flat just meaning that is not growing or increasing at a significant rate. Almost flat might be its growing but not showing significant growth or the same as last month or the last quarter.

It be said there might be a "pausing" or waiting period for some types or exports and they too might not grow in a linear fashion such as Japanese cars.

For example maybe some car manufacturers had a lot of exports one month but the next month not a the same rate as buyers in other countries car supplies are enough for now and don't need to oder any new cars at this time.

Have a nice day and be safe!

Japan Core CPI:

 Article Source:  https://mainichi.jp/english/articles/20220218/p2g/00m/0bu/023000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices inched up 0.2 percent in January from a year earlier, as inflationary pressures from surging energy prices and a weak yen persisted, government data showed Friday.

With energy costs rising at the fastest pace in over four decades, the nationwide core consumer price index excluding volatile fresh food items gained for the fifth straight month, the Ministry of Internal Affairs and Communications said.

The pace of price growth slowed from 0.5 percent in December, largely because of the diminishing year-on-year impact of higher accommodation fees that came in response to the suspension of the government's discount program to revive local tourism amid a resurgence of coronavirus infections.

Ideas:

Inflation in Japan and globally will continue to increase but Japan might not see as big an increase as other countries. For example South Korea has seen a 4 percent increase in prices recently, with energy prices being the most common reason.

South Korea, like Japan, is also experiencing a weak currency which is causing increases in supply cost and energy costs.

While the increase is far from the Bank of Japan's goal of a increase of 2 percent, most likely many in the Japanese population are seeing increases at the supermarkets, at the gas stations, and also companies might be seeing increases in their use of energy, such as oil and gas in their manufacturing plants and or businesses.

Perhaps now is the time for the government to begin to think about reviving the Go To Travel program to help domestic tourism businesses. 

Most likely people are still going to travel during the upcoming Gloden Week holiday but the Go to Travel program might be an incentive for a few more to travel.

Article:

The headline figure is far from the Bank of Japan's 2 percent inflation target, bolstering the likelihood that it will remain a laggard among central banks in major economies in shifting toward policy normalization.

Higher energy and raw material costs have already begun to pressure households and Prime Minister Fumio Kishida said Thursday the government will consider additional steps to mitigate the impact.

The yen's depreciation, a reflection of diverging policy paths for the BOJ and its peers, increases import costs for resource-poor Japan.

Ideas:

The Bank of Japan's target of 2 percent inflation is a long way off. However, it might not be so for suppliers, wholesalers, and other businesses that are seeing their supply costs and energy costs increase due to the weak yen, the increase in suppliers costs due to an increase in shipping costs, raw materail costs increases and so on.

But the same can't be said for the final consumer. The final consumer has seen an increase in some supermarket products, gasoline prices, and home energy prices but most likely they haven't risen in the aggregate to the 2 percent level that the BOJ is looking for.

But the Bank of Japan needs to be careful what is whishes for. Be careful what you wish for is an age old saying, as while some inflation might be related to an increase in consumer demand and people out and about spending and using money, the other side of the coin is supplier inflation, which is not so good for an economy, which is what Japan is now beginning to experience.

The Bank of Japan is maybe doing the right thing by not following the lead of the US Federal Reserve and increasing the BOJ's key interest rate at this time, as every country's economic situations are not exactly the same.

So the Japanese government and the BOJ need to walk a very thin line here of making sure the weak yen, while helping export companies doesn't get too low that it begins to have an adverse effect on Japanese importers and Japanese consumers.

Article:

"Crude oil prices have been rising recently and this will likely continue to have a strong bearing on the CPI beyond the end of the fiscal year (in March)," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.

"Rising energy and food prices are negative" for consumer sentiment, he said.

Energy prices jumped 17.9 percent, the sharpest gain since January 1981, the ministry said. Kerosene prices soared 33.4 percent and gasoline surged 22.0 percent.

Among major gainers, beef bowl prices jumped 9.0 percent, as restaurant operators passed on higher beef prices and shipping costs to consumers.

Ideas:

Consumer sentiment in Japan is always very fragile as it seems consumers in Japan are very price sensitive or very elastic related to prices.

So as energy and food prices continue to increase consumer sentiment, or feeling, is going to get to the point that maybe some consumers will spend less, some consumers will seek out subsitutes or products at lower prices, and or some will not spend.

Consumer spending as always been a challenge for the Bank of Japan as consumer spending is only about 50 percent of GDP while in other advanced countries consumer spending is as high at 60 percent of GDP. 

The 10 percent deficit compared to other countries just might be the difference to what is needed for the BOJ to reach its target of 2 percent inflation.

But the trick is how to get a 10 percent increase in consumer spending to GPD. Its not an easy problem to fix in a country that has a major ageing problem where those in the 65+ age groups spend less.

One idea, which maybe the Abe administration tried was to open the flood gates and allow more international tourists into the country. While it wasn't the solution to fix the ageing problem, but when a million or more international tourists come to Japan, each month, and spend it goes a long way to helping the situation.

Most likely more companies are beginning to see that they will have no choice but to pass on their increased costs to the final consumer.

A 9.0 percent might not seem that much, but if you consider who are the customers that frequent the beef bowl restauarants, its most likely middle class customers and the lower classes who don't have that much disposable, or extra income, so it might affect them a lot compared to the consumer/customers who might to the Prince Hotel Viking, buffet, on a Saturday or Sunday for lunch.

Article:

The ministry data showed the rise in accommodation fees moderated in January to 0.6 percent, compared with a 44.0 percent year-on-year gain in December.

Japan will likely face inflationary pressures in the coming months as the escalating standoff between Ukraine and Russia has sent crude oil prices higher, while the year-on-year impact of lower mobile phone fees, which plunged 53.6 percent in January, is set to dissipate.

"It's possible that the core CPI will temporarily hit 2 percent. That won't mean the BOJ's price stability target has been attained as Mr. Kuroda hopes to see, and thus monetary easing policy will not change," Kodama added.

The so-called core-core CPI, which excludes both fresh food and energy items, fell 1.1 percent, the sharpest decline since March 2011. It was down for the 10th straight month.

Ideas:

Most likely hotels in Japan increased their prices for two reasons: One being the holiday season and the coming new year period. and the second reason was to try and makeup for some of the losses they experienced because of the pandemic the previous two years.

Crude oil and other energy prices are most likely going to continue to increase. But its not just because of any shortages related to Ukraine situation but more because of incrases in logistics or shipping costs which have been steadily increasing ever since the pandemic begain.

The lowering of mobile phone fees is both a positive and negative for any economy, especially in Japan where phone fees were too high. But this is/was a situation where consumers felt they had no choice but the pay the higher fees as a mobile/smartphone had become a daily necessity for most consumers.

The negative part might be that mobile phone companies are now going to find ways to maintain their profit margins by finding other products or services they can charge more for to keep their profit margins at the same level.

The BOJ's target might be reached but again at what cost. Is it consumer spending that has increased inflation or is it suppliers costs that have increased inflaation?

But here is a logic that might be different from what some central banks might be thinking. As inflation begins to get too high many central banks will increase the key interest rate to try and slow down inflation.

But what if its not consumer spending driving up inflation but now supplier inflation, meaning many companies are now beginnig to see their costs increase. 

So what if the companies now need loans and such to help them because of their increased costs.

So now the banks have increased their rates meaning businesses now have to pay more for a loan on top of their already increasd supplier costs. 

And then their is the idea of those with loans now have to pay more, which means less disposable or extra income to use in the economy.

While the Bank of Japan might see its not a good time to increase the key interest rate because inflation is related too much to suppler cost incrases and not related to consumer spending inflation.

Have a nice day and be safe!

Japan Trade Deficit:

 Article Source: https://mainichi.jp/english/articles/20220217/p2g/00m/0bu/026000c 

Article:

TOKYO (Kyodo) -- Japan posted its largest goods trade deficit in eight years in January, as imports continued to swell on the back of higher energy costs and a weaker yen, government data showed Thursday.

The country had a deficit of 2.19 trillion yen ($19 billion), the sixth straight month of red ink and the biggest since January 2014 when a 2.80 trillion yen deficit was marked, according to a preliminary report by the Finance Ministry.

The value of overall imports rose 39.6 percent from a year earlier to 8.52 trillion yen, up for the 12th consecutive month and hitting a record high for the third month in a row since comparable data became available in January 1979.

Ideas:

While its important to see the trade deficit in terms of value, it might be good to see the trade deficit or surplus in terms of the volume of exports and imports.

Of course the weak yen has a huge effect on the value of imports, which inflates the actual amount that came into Japan.

The weak yen is going to cause all kinds of challenges for all kinds of companies in Japan, as the yen doesn't seem to be getting any stronger, which means importers are going to have to find ways to overcome the increased costs due to the weak yen.

Many companies maybe now are going to have no choice but to pass on their increased costs to the next in the supply chain.

Article:

Surging crude oil, coal and liquefied natural gas prices as well as the yen's depreciation against the U.S. dollar amid prospects of monetary tightening by the U.S. Federal Reserve have all contributed to pushing up Japan's value of imports.

The expansion of imports outpaced a 9.6 percent increase in exports to 6.33 trillion yen, an 11th straight monthly rise based on increased unit prices of exported items such as steel and diesel oil.

Auto exports declined 1.0 percent from a year earlier, compared with 17.6 percent growth in December, reflecting the impact of a cutback in output due to the pandemic.

Ideas:

So now there is a triple challenge of not only the weakening yen, but the continued increase in energy prices globally. And then add in the possiblity of the Federal Reserve increasing the key interest rate is going to make it even more challenging for Japanese companies.

Exports continue to show steady growth, which is a good sign the Japanese products are still in demand globally, whether chip producing equipment to the steady demand for Japanese cars.

The steady growth in exports means the the Japanese current account is not going to be depleted as exports bring money into the Japanese economy and the Japanese current account while imports remove money from the Japanese economy and the current account.

Japan is still an export powerhouse so even a 1.0 percent drop from a year earlier is not going to make a serious dent in the overall import/export structure of the Japanese economy.

Yes Japan also relies heavily on imports being an resource deficient country, but exports, until recently, have been strong enough to overcome the resource deficiency.

Article:

Kazuma Kishikawa, an economist at the Daiwa Institute of Research, cited a resurgence of coronavirus infections in Japan in the reporting month, fueled by the highly contagious Omicron variant, as a reason for the sluggish auto shipments.

"At domestic car parts factories, more workers considered to have been in close contact with infected people were suspended, which forced some major automakers to cut production," Kishikawa said.

By country, exports to China fell 5.4 percent to 1.17 trillion yen, down for the first time in 19 months, mainly due to a drop in plastic and vehicle engine shipments. Imports from Japan's largest trading partner jumped 23.7 percent to a record 2.13 trillion yen.

Ideas:

Exports or specific types of exports can always be in a cyclical or seasonal situation meaning they don't always run exactly in a linear fashion, meaning there might not be positive growth each month or each quarter.

And then add in the continued pandemic situation which means even more reasons for the lack of an increase in exports from year to year, quarter to quarter, month to month and so on.

Besides the pandemic situation there are a many reasons why some shipments on some products change from month to month. It could be such as a surplus of products at the company that uses the Japanese products, it could be some temporary shutdowns in production, it could be a delay in shipping and so on.

And as the yen continues to weaken import prices continue to increase which places even more stress on Japanease importers.

Article:

With the United States, Japan's exports climbed 11.5 percent to 1.12 trillion yen, pushed up by brisk shipments of chip-making equipment. Imports soared 33.4 percent to 781.89 billion yen, underpinned by a rise in medical and petroleum products.

As for the European Union, Japanese exports increased 16.1 percent to 618.04 billion yen, with imports growing 26.2 percent to 870.69 billion yen. Exports to Asia including China totaled 3.58 trillion yen, up 6.3 percent, while imports amounted 4.18 trillion yen, up 29.1 percent.

Looking forward, energy prices could continue to rise amid mounting fears of a possible Russian invasion of Ukraine. But Kishikawa said the impact on Japan's imports could be moderate.

Ideas:

Global trade, at the time of this article looks to be on a continued solid growth pattern despite the weak yen and the increase in energy prices.

And then add in the possible Russia and Ukraine situation it might begin to have some impact on global trade such as with grain exports from the two countries and the energy exports from Russia than many countries now depend on.

Japan seemed to have taken advantage of the idea that chip making equipment is now a major export product as chips are now the major component in most electronic products these days.

So the future for chips producers looks very good it they can continue to produce and not have any situations such as in the summer when the chips plants were temporary shutdown causing delays in many different chip producing areas.

Article:

"Japan buys crude oil mainly from Arab producers, and the price of Dubai crude oil is less susceptible to the Ukraine situation than those of Brent and West Texas Intermediate," said Kishikawa.

He added that an increase in Japan's purchase of COVID-19 vaccines will continue to raise the costs of imports until around April, and the trade deficit will gradually shrink thereafter.

All figures were compiled on a customs-cleared basis.

Ideas:

Its good for any country to not rely too much on only one resource producing country and try to have as many resources as possible to avoid either delays in shipments, delays in production, or even changes in currency strengths or weaknesses.

The easiest way to minimize a trade deficit is to increase exports compared to imports. But as Japan is resource deficient economy, its not easy to always to maintain a trade surplus when the yen is weak and continues to weaken and there is always periods of less or more exports depending on global demand, the pandemic, logistical challenges and so on.

METI and other parts of the Japanease government and so have always recognized that Japan is a resource deficient economy, and most likely always will be and as such, has promoted exporting of Japanease products as a main priority to overcome the cash flow out of the country due the constant need to imports many products for the economy.

Have a nice day and be safe!

Japan GDP:

 Article Source:  https://mainichi.jp/english/articles/20220215/p2g/00m/0bu/014000c

Article:

TOKYO (Kyodo) -- Japan's economy in the October-December period grew a real 1.3 percent from the previous quarter, or an annualized 5.4 percent, as personal consumption recovered with the end of a COVID-19 state of emergency amid low infections, government data showed Tuesday.

Real gross domestic product, the total value of goods and services produced in the country adjusted for inflation, increased for the first time in two quarters following a 2.7 percent contraction in the previous quarter, according to the preliminary data released by the Cabinet Office.

The annualized figure was worse than the average projection of a 5.5 percent expansion in a poll of private-sector economists conducted by Kyodo News.

Ideas:

It must be remembered, that just because GDP shows an increase it doesn't mean all sectors or areas of the economy grew at an equal rate.

An economy is very complex and there are always going to be areas of growth and areas of no growth or decreased growth.

Whether it was 5.4 percent or 5.5 percent is not that important, as estimates or projections are not an exact science. Estimates and projections are nothing more than guesses as, of course based on many factors, as to what might happen in the future.

Personal consumer or consumer spending might have recovered some, but its always a major challenge for the Bank of Japan and its target of 2 percent inflation.

As Japan becomes more and more of an ageing society, the potential for less consumer spending is always going to be a challenge. But a recent report has suggested that those in the 20 to 65 age groups in Japan spend as much or more than other OECD economies. But the challenge is the 65+ age groups are spending less and less which is going to have challenges for the Japanese economy.

Article:

Private consumption rose 2.7 percent, up for the first time in two quarters. More people went to restaurants and bars, and took trips after the state of emergency was fully lifted on Oct. 1, as the number of new coronavirus cases remained at low levels.

During most of the previous quarter, Tokyo, Osaka and some other areas were under the state of emergency due to a resurgence of infections. People were asked to stay at home, and restaurants and bars were requested to close early and refrain from serving alcohol.

In the reporting quarter, car purchases also expanded in line with a recovery of vehicle output as the effects of a global semiconductor shortage and parts supply disruptions in Southeast Asia caused by the pandemic eased.

Ideas:

An increase of 2.7 percent in consumer spending might sound like a good thing, but the major challenge is it sustainable to the point where consumer spending can increase above the 50 percent level of Japan's GDP. 

In many advanced economies consumer spending is the largest component of GDP usually above 60 percent, as Japan hover around 50 percent of GDP.

That extra 10 percent might be what the Japanease economy really needs to push the Bank of Japan's goal of reaching the 2 percent target for consumer inflation,which might just be what is needed to get companies to finally give their employees the needed increase in salaries.

So what comes first; an increase in salaries or an increase in consumer spending? That is the important question. Companies might not increase salaries until they see a significant increase in consumer demand/consumer spending, while company empoyees/consumers might not increase their spending significantly unless they see and feel an increase in their salaries.

At this reporting car purchases might have increased some but that doesn't mean the the car industry is free of challenges, as the supply lines are still very fragile and could easily become challenged again with supply disruptions.

Article:

Exports grew 1.0 percent, marking the first rise in two quarters, pushed up by brisk shipments of chip-making equipment and construction machinery.

In nominal terms, unadjusted for price changes, Japan's economy expanded 0.5 percent, or an annualized 2.0 percent, in the last quarter of 2021.

In the whole of 2021, the Japanese economy expanded 1.7 percent in real terms, growing for the first time in three years, following a 4.5 percent decline in 2020.

Revised GDP data are scheduled to be released on March 9.

Ideas:

Any kind of export growth is good, but at the same time, only a 1 percent growth in exports for Japan might not be that good as Japan is considered an exporting powerhouse, just like China and South Korea.

As more and more products need and use chips, the idea that Japan is producing chip-making equipment means it recognizes that the chip market is a significant market that is only going to get bigger.

And the idea maybe that manufacturers maybe need to expand their supply bases and not rely on just a few suppliers as maybe was the problem then and now if suppliers continue to have logistical and shipping problems.

The Japanese economy is still not where it should be an might not be where it should be for another six months to a year, as there are still many parts of the economy not even near its pre-pandemic level such as anything related to the tourism industry. 

While some parts of the services sectors might be back to some kind of new normal, many parts of the services economy are nowhere normal. 

Such all of those businensses that relied heavily on international tourism might not recover anytime soon, even though the Japanease government is allowing in more business people.

The business people are not the main international group that tourism related businesses relied on or focused on when the Abe administration basically opened the floodgates to international tourists.

Its was all of the average tourists from China, South Korea, South-East Asian countries and of course any and all of the EU countries who have yet to come back as Japan has yet to re-open the international tourism floodgates, which bring in a ton of money into the Japanese economy.

Have a nice day and be safe!