Japan Economic Growth:

 Article Source: https://mainichi.jp/english/articles/20220608/p2g/00m/0bu/024000c

Article:

TOKYO (Kyodo) -- Japan's economy shrank an annualized real 0.5 percent in the January-March period, revised up from an initially reported 1.0 percent contraction, on stronger personal consumption amid COVID-19 restrictions, government data showed Wednesday.

The decline in inflation-adjusted gross domestic product, the total value of goods and services produced in the country, corresponds to a 0.1 percent fall on a quarterly basis, the Cabinet Office said. It followed an annualized 4.0 percent expansion in the previous quarter.

The latest figure for the quarter was better than the average forecast of an annualized 1.2 percent contraction by seven private-sector economists polled by Kyodo News.

Ideas:

Estimates or projections are for the most part just guesses and all the technology and forecasting in the world can't really predict correctly human behavior and what consumers and companies are going to do exactly over a three month period.

In Q1 was the outbreak again of the virus situation so mostly there was less economic activity that was what expected. Even might been a slight surge in consumer spending but even then its hard to predict just what Japanese consumers are going to do from quarter to quarter as consumer spending is not the strongest part of Japanese GDP like it is in other advanced economies.

Meaning Japanese consumers tend to be more frugile in how they spend and sometimes businesses might have a challenge determing what the forecast for consumer spending will be over the next three months.

A decrease of 0.5 percent might not be good but its still better than the 1.2 percen that was estimated. 

So again companies sometimes just don't know what is going to happen from quarter to quarter espeiallly over the last two years, which makes it very challening for them to plan and forecast correctly.

Article:

Private consumption, which accounts for more than half of the country's GDP, was revised up to a 0.06 percent increase from a 0.03 percent decline on a quarterly basis, contributing to the overall upgrade.

Although spending on eating out and accommodation remained weak as many areas remained under coronavirus restrictions that called for restaurants to close early, the latest data related to output and services showed declines in car sales and mobile phone communication fees were not as large as projected, a government official said.

Among consumption expenditures, spending on durable goods such as cars fell 0.8 percent, revised upward from a 1.6 percent decline, while spending on services, including communication fees, sagged 0.1 percent, up from a 0.2 percent decrease.

Ideas:

Its hard to say sometimes what is not so bad and or not as bad expected. Its easy to say it for the economy overall, the real challenge it too look closely related to families and businesses and how are they doing. 

An economy is a very complex organism and there are always postives and negatives in an economy. Some parts of the economy or some sectors might not be challenged at all while some other sector or parts might be very challenged because of the pandemic, surging raw material prices, gasoline prices, home energy prices, supermarket prices and so on. 

So the numbers never tell the real story and of course they aren't supposed to but just to give a glimpse of what might be happening.

Always take the latest numbers with a grain of salt meaning they are again are just a glimpse of what might be happening and whomever needs to dig deeper to really see what is going on.

Again just examine what might be happening with households or businesses and see how they are really doing related to the economy.

Article:

Capital expenditure fell 0.7 percent, downgraded from an initial 0.5 percent after taking into account the latest data showing weaker software investment.

Exports grew 1.1 percent, unchanged from the initial report, while imports increased 3.3 percent, downgraded from a 3.4 percent rise.

Government spending, including coronavirus vaccine purchasing costs, rose 0.5 percent, downgraded from a 0.6 percent increase, while public investment sagged 3.9 percent, revised downward from a 3.6 percent decline.

Ideas:

Captial expenditures or business spending is not a direct linear line as companies spend today and maybe don't spend tomorrow or the next month. So its not realistic to expect an increase in business spending or an increase in business spending every month or even every quarter.

And of course if they the environment or economy is not favorable they are going to reduce their spending and or wait or a better time to spend or use their money on whatever.

As Japan is supposed to be a major exporting economy a 1.1 increase might be considered not as good as some would like. But we are talking about Q1 the virus situation has surged so maybe export demand might not have been as good as expected.

Related to imports what does it matter if its 3.3 or 3.4. That's still a good amount of imports coming into Japan. But of course the surge in raw material prices and energy prices meant that importers now had to pay more than they did a year ago.

Just what is included in public investements, public spending exactly. Does it include subidies still for businesses and families who need help or have the subsidies began to dcrease as the pandemic maybe begins to wind down.

Article:

Nominal GDP, not adjusted for inflation, expanded 0.2 percent, or an annualized 0.6 percent, in the reporting quarter, revised up from an initially reported annualized increase of 0.4 percent.

In fiscal 2021 ended March, the world's third-largest economy grew 2.2 percent in real terms, revised up from an increase of 2.1 percent and marking the first expansion in three years.

Ideas:

Any kind of economc growth is good. A 2.2 percent real growth for fiscal 2021 is much better than most years. But it must be remember that just how bad fiscal 2020 might have been so maybe even 2.2 is not as good as it could have been.

But to be fair and honest, as the Japanese economy sometimes doesn't even reach 1.0 percent economic growth 2.2 is still very good.

But at the time, the Japanese economy and economic growth just never seems to reach its potential overall for whatever reason, such as a lack of wage increases, low consumer spending and so on, which causes a lot of constraints on the economy.

For the Japanese economy to really grow again it needs to see an increase in real consumer spending but more importantly it needs to a real increase in wages.

If consumers/workers begin to see some real inceases in their overall wages, and they begin to feel good about theyh might actually go out and spend some of it or a lot it. 

But for now they haven't seen any wage increases for a very long time and as such feel constrained related to their extra income spending.

And then there are the businesses who don't want to increase wages and or they just can't do it now, as they too are now constrained with incrasing raw material costs, increasing energy costs and so on as their profits margins continue to shrink even more.

Have a nice day and be safe!