Japan GDP Growth:

 Article Source: https://mainichi.jp/english/articles/20220815/p2g/00m/0bu/007000c

Article:

TOKYO (Kyodo) -- Japan's economy in the April-June period grew a real 0.5 percent from the previous quarter, or an annualized 2.2 percent, on the back of recovering private consumption following the removal of coronavirus restrictions in March, government data showed Monday.

Real gross domestic product, the total value of goods and services produced in a country adjusted for inflation, expanded for the third consecutive quarter following nearly flat growth in the January-March quarter, according to the preliminary report released by the Cabinet Office.

Ideas:

Japan's economy is going to take some time to get back to the pre-pandemic level as supply chain disruptions along with energy cost and supply challenges continue to challenge Japan and other economies.

Private consumption or private spending is always the weak link related to Japanese GDP growth, as consumer spending in Japan is not near the equal of other advanced economies.

There are many reasons for the lack of consumer spending in Japan but two of the main challenges are a lack of wage growth over the years and then add in the ageing society situation, as those about 65/70 tend to spend less.

Article:

Private consumption, which accounts for more than half of the country's GDP, rose 1.1 percent, increasing for the third straight quarter, as more people dined out and traveled after Japan lifted COVID-19 restrictions in late March in all areas covered, including Tokyo and Osaka, amid a downward trend in the number of new infections.

Capital investment, another key pillar of domestic demand, grew 1.4 percent, following a 0.3 percent contraction in the previous quarter, propelled by software investment, according to the data.

Annualized real GDP in the latest quarter totaled 542 trillion yen ($4.1 trillion), exceeding the 540 trillion yen logged in the October-December period of 2019 before the pandemic hit Japan Despite the third consecutive quarterly increase in real GDP, some economists said the outlook remains unclear due to a resurgence of COVID-19 infections and higher prices that could dampen consumer spending.

Ideas:

Private consumption or consumer spending might be at the 50 percent level of Japan's GDP but again its not equal to other countries where consumer spending might be as much of 60 percent or more. 

If consumer spending in Japan can ever gets up to the 60 percent level of other advanced economies then Japan's GDP growth might reach the two percent level on a sustained basis.

But until Japan can see real wage growth that may never happen or not in the near future.

Capital investment might have seen a temporary surge but it shouldn't be seen as a leading indictaor just yet as there are too many variables out there are are slowing down the Japanese economy.

The outlook is very unclear at this time with energy costs continuing to increase, materials costs continuing too and add in the supply chain challenges, and even more the weak yen is causing a lot of challenges for the Japanese economy.

Article:

Saisuke Sakai, senior economist at Mizuho Research & Technologies, pointed out that GDP in the reporting period was still lower than the average of the four quarters in 2019, as personal spending in its last quarter was dented by a consumption tax hike in October that year.

"While Japan's economy has seen positive growth, it is still halfway through in its recovery," Sakai said, adding a resurgence of coronavirus infections could discourage people from going out even amid an absence of restrictions, hitting personal consumption in the next quarter.

Public investment also rose 0.9 percent in real terms from a decrease of 3.2 percent in the previous quarter.

Ideas:

Traveling to Japan in September of 2019, there was a fever pitch or a spending frenzy going on as all stores had sales on to encourage shoppers to buy before the Oct. 1 tax increase went into effect. 

That was also the time of the Japan 2019 Rugby World Cup and as Japan was doing very well there was an exitement in the air along with spending frenzy going on at the same time.

Japan might be halfway through its recovery, but the Japan economy is not going to get back to the 2019 level until it opens up fully to international tourists and even then its going to take some time to get to the 31 million that came to Japan in 2019.

Airline flight shortages, pilot shortages, and fuel surcharge inceases are going to delay the full opening of international tourists to Japan for a while.

Article:

Exports and imports increased 0.9 percent and 0.7 percent, respectively.

Daishiro Yamagiwa, minister in charge of economic revitalization, said the preliminary GDP report showed the world's third-largest economy is gradually recovering.

"We would like to put the Japanese economy on a higher growth path" toward a virtuous cycle of sustainable growth led by private sector demand and the distribution of wealth, Yamagiwa said in a statement.

Ideas:

Exports and imports seemed to be trending down globally as supply chains, energy costs, along with overall global inflation appears to be causing a slight pause in overall global trade.

Yes, the Jaapanese economy appears to be gradually recovering, but the real problem is that it seems to always be in the gradual recovery mode.

Japan, at the present time, is not going to get to that "higher growth path" until Japan can see some real wage growth. And not juse short-term one time fix but it has to be a sustainable wage growth period.

Japanese companies seem to be too risk adverse to consider any real wage strategies at this time as they all seemd to be woried about energy costs, raw material costs, and the weak yen.

Article:

In nominal terms, unadjusted for price changes, Japan's economy grew 0.3 percent, or an annualized 1.1 percent, the data showed.

While imported energy and food prices remain high amid Russia's invasion of Ukraine, many companies are unable to fully pass on their higher costs to retail prices, experts said.

Sakai added it is necessary to keep a close eye on how economic slowdowns overseas would affect Japan's growth in the coming quarters.

Ideas:

At the present time a 1.1 growth for the year might all that Japan can expect for now because of the Ukraine situation, continued energy cost increases, raw material cost increases, not to mention the continued China and supply chain challenges.

Many companies might be willing to pass on some or all of thier costs but they face a reluctant group that is too used to low prices or even delfation.

Its going to take some time before the general consumer public begins to realize that evetually, for the good of the economy and for the good of society, there has got to be more balanced in the economy which has to include price increases and not a continued period of deflation.

Companies can't grow if they are always having to absorb every cost increase they have without being able to increase prices sometimes and or pass on some of their costs to the next in the supply chain including the final consumer.

Its got to be a give and take between all groups for a fully balanced market economy.

Have a nice day and be safe!