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!