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!