Bank of Japan To Keep Current Policy For Now: All 2023 Blog Articles Are Completed.

 

Bank of Japan won't rush to change policy because of Fed's outlook: chief

Article Source:  https://mainichi.jp/english/articles/20231219/p2g/00m/0bu/036000c

Ideas:

The Bank of Japan is most likely not going to show its hand about what is going to do in the future, as a way to not upset the markets, if it does something different than what is said.

At this time, as of news about the Japanese economy, the Japanese economy is not in a good condition for changes in the BOJ policy as the economy, again, has fallen into recession.

Inflation might indeed be decreasing, but its the wrong type of inflation that the BOJ is looking for, as its looking for consumer demand and consumer spending to lift up the economy, not companies passing-on their costs.

If and when the US Federal Reserve does reduce its key rate, that will decrease the variance between the US rate and the Japanese rate, which will then increase the Japanese yen, and it will not be a weak as it is now.

The problem still will be will the Japanese yen, which was weak become stronger and by how much, which might dissuade some foreign tourists from going to Japan.

A stronger yen, means less profits for Japanese export companies as they depend on a weak yen for their profits overseas.

But at the same time, a stronger yen, will be better for the domestic Japanese economy, and for improved import prices.

If Japanese financial institutions, including most banks, were having any detrimental impacts to due the negative rate, it would have been known many years ago, as the negative rate policy has been in existence since around 2014.

The financial markets can speculate all they want but the BOJ is not going to do anything until its ready to do something, and when it does something, the change might be so small that in the Japanese economy might not even notice any changes.

And when it does make some changes, it will test the markets to see just how the changes are going to affect the financial markets and maybe the stock market too.

The challenge for wage growth is not with large Japanese companies, but with small and midsize companies who don't have any room with their profit margins to increase wages as this time.

That might mean up to 70 percent of Japanese workers, in April of 2024, might not see a wage increase.

Not only wage increases but consumer spending are the keys to economic improvement, but if wages are not high enough, then again, consumer spending might not be enough for the Bank of Japan to make significant changes.

But again, unfortunately, the Japanese economy, has fallen into a recession because of the Oct. to Dec. quarter having negative growth, which is two consecutive quarters for negative growth.

As a result, because of the negative growth situation, the BOJ most likely will delay any real changes until its sees better economic growth.

Have a nice day and be safe!

Japan Holiday Spending: Updated Feb. 13, 2024

 

Inflation, weak yen hit appetite for holiday spending in Japan

Article Source: https://mainichi.jp/english/articles/20231231/p2g/00m/0bu/025000c

Ideas:

No doubt the continued inflation challenges are affecting Japanese holiday plans and spending plans. But each household is very much different so some might be cutting back and some might not be as their income is high enough that they are not concerned with inflation.

Traditionally the New Year holiday period is a big event in Japan as many families have a long holiday during the New Year period. But because inflation has decreased the extra income of some families they might be cutting back on the New Years holiday plans.

When I was in Yokohama Japan in Jan. of this year, 2024, you couldn't really tell that people were reducing their spending as shoppers were everywhere in the Yokohama eki, station, area, as its a major shopping area in Yokohama.

In South Korea, the lunar new year is a major holiday period, of four days, and many families return to their hometowns, but at the same time, many now travel overseas such as Japan for the four day holiday. But at the same time, many people, especially in the Seoul city region, don't travel to the southern part of the country anymore as many of them are not interested in travel as they just want to rest. I'm sure in Japan, maybe many families just want to rest the the New Year holiday period.

The weak yen has maybe discourage many Japanese from traveling overseas as they have to pay more for what they buy, as their purchasing power has been reduced.

At the same time, because of the weak yen, maybe many Chinese and many South Korean, along the Taiwanese, and other Asian tourists want to travel to Japan because of the weak yen and the increased purchasing power.

For the most part, Japan has been characterized as a country of savers compared to the US which has been seen as country of spenders. 

Most likely, the inflation situation has forced many people to save more and spend less in Japan and or they are saving what they can despite the inflation challenges.

People always want to move around or travel or even just get out and to shopping or something, as the pandemic might have prevented them from doing what they wanted as much as they wanted.

Again, when I was in Yokohama, which is just southeast of Tokyo, there were hordes of shoppers in Sogo department store and in the Yokohama station, eki, areas as its didn't look like many people were there just to eye shop as they were all buying whatever, and the Starbucks shops were all full with people all day long.

Have a nice day and be safe.

Japan Household Budget Challenges: Updated March 3, 2024.

 

Japan household budget burdens to rise by $200 per person in 2024: estimate

Article Source: https://mainichi.jp/english/articles/20231230/p2a/00m/0bu/025000c

Ideas:

Maybe spread out for a year $200 might not be that much, but then again, for some Japanese households it might be too much onto of the continued inflation situation.

Real wages like the real economy is what is relevant for the average Japanese household, as GDP, record high stock market might not mean anything to the average Japanese.

But then again, inflation and budget concerns are very much individual from household to household, and of course it depends on how each household spends and how much are their costs related to energy, grocery shopping and so on.

The flat tax cut sounds good, but is each household going to get the tax cut in cash of is it just a tax cut in the taxes each person or household usually pays?

A cash handout of 40,000 yen would be good, but if each household could get it the cash and then they could use how the think is best.

Inflation slowing from 3.1% to2.4% might not even be noticeable for most households as maybe don't follow or think about how much inflation really is but in real terms, how much they have to pay related to food purchases and energy payments, then yes then they see it going up and maybe down in 2024.

The Japanese government should keep the energy subsidies through 2024, along with the tax cut and handout to low-income families as a way to really insure that inflation is finally lowered.

And of course, if wage increases are significant enough in April 2024, which might mean consumer demand and consumer spending might get back to some kind of normal.

But all companies need to increase wages and not just large companies, but small and midsize companies too need to do what they can.

Price controls are good, for example on daily necessities such as milk, eggs, flour, but can't be used for very a long time as they disrupt the normal flow of a market economy.

Japan is a resource-poor country and has to import much of what it needs, and of course is subject to global prices and then the variance between the US key rate and the Japan key rate has made the Japanese yen very weak, which means import prices are very high in Japan.

Even though the US hasn't increase its rate for three consecutive meetings, the variance is still very high at this time.

The Bank of Japan might be signaling it might begin to think about how to change it ultra-low policy, but as we move into 2024, the news is the Japanese economy has slipped into another recession, which could affect what the Bank of Japan is going to do about its low rate policy.

There are a lot of "ifs" related to this paragraph as anything can happen. For example the July-Sept. quarter was negative growth for Japan, and many were saying that Oct.- Dec. would see improved growth, but the opposite has actually happened as the Oct-Dec. quarter was negative growth too, which meant the Japanese economy has slipped back into a recession.

The Japanese yen, might become stronger, but at the same time, the Japanese economy might still be in a not so good place with it not growing.

And then there is the idea of the weak yen bringing in more foreign tourists and the weak yen, improve their purchasing power.

If the weak yen gets stronger, which is good for the domestic economy, the Bank of Japan has to decide what is best overall of the economy, a weak yen which helps exporters and foreign tourists or a strong yen which helps the domestic economy and importers. Maybe something in the middle that helps everyone.

Have a nice day and be safe!

Bank of Japan And Wage Growth: Updated March 9, 2024.

 

Prospect of wage growth still challenging for households, BOJ

Article Source:  https://mainichi.jp/english/articles/20231229/p2g/00m/0bu/020000c

Ideas:

Companies wages need to increase to the point where ordinary citizens can feel the effects in their disposable income.

There might be a lag effect, meaning, it might take time for Japanese consumers feel good about their increased wages.

That's not the Prime Ministers fault, as in all economies, when wages increase it might take several months for longer to see the full effects to the wage increases.

The Bank of Japan will have to make a decision, if and when they increase interest rates. as the Japanese economy, for a very long time has lived on borrowing costs as rock-bottom levels.

And then there is the idea of Japanese export companies who are benefitting from the weak yen, due to the zero interest rate. And don't forget international tourists who travel to Japan, maybe due to the weak yen and improved purchasing power.

There are always positives and negatives in an economy. Such as a significant labor shortage in Japan, at the moment would be definite negative, but increasing wages as a way to get more or better workers is a positive.

Perhaps, over the years many Japanese companies might have thought about increasing wages, but as Japan is a group society, maybe many companies didn't do it, as other companies were not doing it.

Its been known for many years too. that Japanese companies were sitting on huge profits, and one of the ideas for the zero interest rate situation, was/is if companies didn't use their huge profits then then they over the long term, would lose them because of zero or negatives rates in their company banks.

But as companies increase wages, their profit margins might shrink, so of course, they are gong to pass-on their increased wages increases to the next in the supply chain, including maybe the final customer.

Its going to take a lot for the Bank of Japan to be in sync with the US Federal Reserve and there is, at this moment, a significant different between Japanese interest rates and the US rate.

But, as always, the Japanese economy is not cooperating, as it seems to have entered another recession, after two consecutive quarters for negative economic growth, which doesn't fit with the Bank of Japan's plan to change it current policy.

Weak demand, weak consumer spending, has been a challenge for the Japanese economy for a very long time, and it might not change anytime soon, as there are some structural challenges within the Japanese economy, such as an aged society, which spends less than normal.

And then there is the idea that 70 percent of the Japanese workforce don't work for large Japanese companies, and in April of 2023, only large companies workers got wages increases and maybe some small companies gave wage increases, but not as much as the large companies.

Wage increases in April of 2023 averages around 3.6 percent but inflation, for most Japanese workers was much higher than that, and again, many Japanese workers didn't get a wage increase, or if they didn't it wasn't 3.6 percent.

To see or feel the full effects related to the wage increases they need to be more than what is the current inflation rate. If not, than Japan will continue to be stuck with less consumer demand and less consumer spending to grow the Japanese economy.

Whether its 3.8, 3.7, or 4.1, the wages increases need to be even more than that for consumers/workers to feel good about their wage increases before they begin to spend again in the Japanese economy.

And then there is the ideas of large companies maybe giving higher wages increases than small and midsize companies which is setting up, if not already, two-tiered economy of haves and have not, as the Japanese economy is made of large companies wages increases and small company wage increases, who are being left behind.

And yes, not all companies can keep up with the biggest increases of some Japanese companies, but good or bad, that is part or a market economy, as not all companies grow at the same rate, or have profits at the same rate, and as such they all can't spend the same.

The Japanese economy has a long way to go before it breaks with deflation, as deflation is/can become a mindset in a society and economy, as consumers/households get used to lower prices and lowered expectations.

And yes, too, wage increases might only have a limited impact on consumer spending, as most likely its going to take a while before consumers actually feel good about their wage increases and they might even save some or all of it before they begin to spend again, freely in the Japanese economy.

Yes, it might take until the summer for wage increases begin to affect the Japanese economy, and maybe by Golden Week in May, there will be some significant consumer spending in the Japanese economy.

But then again, Japanese consumers might not want to spend just yet in May and Golden Week and they are still not seeing the full effects of the wages at that time.

And yes too, the Bank of Japan is not going to do anything too fast or too radical, as they don't want to upset the financial markets with any moves that are not needed or expected.

The effects of the weak yen, and its variance with the US rate, and US dollar, might not change much until 2025 and definitely not in 2024.

Inflation might be decreasing but is it decreasing enough for the benefit of Japanese households or Japanese consumers.

The growth rate of the Japanese economy has always been a challenge and it rarely grows more than 2 percent, if even that.

But at the same time, the Japanese economy, and society, is a very stable economy, and despite all of its challenges, is still a strong economy and society.

One of the benefits of increased interest rates, is higher savings rates for Japanese consumers/households, which in the past, were some of the highest savers in the world.

But the challenge is a mix of balanced economy, some savings and some spending in the economy, as consumers maybe begin to feel good about the increase in wages.

Most central banks prefer to see inflation between 2 and 4 percent, but maybe the Bank of Japan feels 3 or 4 percent is too much for the Japanese economy and Japanese society. 

The Bank of Japan is looking for 2 percent inflation related to increased consumer demand and or consumer spending, and maybe even companies who pass-on their wage increases to the next in the supply chain.

Changing from unusual to a normal one, in terms of policy requires not only companies being ready and prepared for the policy changes but for the Japanese society too.

If the Japanese society is not ready for the changes it could have negative effects such as less consumer spending, less consumer demand and so on.

For companies there might be less capital spending and maybe even less wage increases in the future.

Have a nice day and be safe!

Japan Nov. Industrial Output: Updated March 1, 2024.

 

Japan's Nov. industrial output falls 0.9% on weak auto output

Article Source:  https://mainichi.jp/english/articles/20231228/p2g/00m/0bu/026000c

Ideas:

A decrease of 0.9 percent is not that big of a decrease unless you are obsessed with perfect numbers or statistics and there always has to be positive increases.

It could easily be a margin of error related statistical reporting either up or down. Many times the reporting agency will come back with a revised number either up or down.

The index still is at 104 to the base of 100, which shows tat industrial output is still positive in Japan. And as we see there was 1.3 percent increase in October, but again, numbers can change as new or relevant data is found.

The idea that industrial output fluctuates indecisively just shows how volatiles indexes can be as maybe there is not real reason for the fluctuations, other than factories shutdowns, material shortage, supply chain challenges and so on.

The 15 sectors mentioned probably will never all be positive, as just like an economy with different sectors, and also with different companies, there are going to be some who do better than others in output and growth.

The auto industry maybe was hampered with the Toyota Daihatsu situation and the not so good reporting of quality testing. 

For example, as mentioned, Daihatsu specializes in small passenger vehicles and even produces some Toyota models at their Daihatsu plants.

Daihatsu is subsidiary of Toyota and produces its own line of cars under the Daihatsu name, as they are part of the Toyota group of companies.

Once again, maybe Japan has not yet overcome the electronic component and chip shortage that been a challenge now for the past three years.

Again, some production sectors saw increases and some saw decreases, which is common among many sectors.

Semiconductors should be a major economic driver in the the present and in the future, as every electrical machine now uses some kind of semiconductors to function.

An economic driver is a product or sectors that significantly affects economic growth such a the Japanese car production industry and now even the semiconductor industry.

As mentioned before, Daihatsu has had some safety testing issues and the decided, maybe with pressure from the Toyota group to halt production at this time.

This might have had an effect on the overall car production in Japan as maybe there were less cars produced.

Again a drop of 1.3 percent is not that big a deal, as again it easily be in the margin of error in statistical reporting.

Any time there is an increase in inventories that could mean a drop in demand, and error in estimating demand for the future and so on.

A poll like a survey about the future is just a guess, and companies really don't know exactly what is going to happen until production begins and demand is determined.

Capital investment, sometimes, can be very seasonal, meaning they don't happen every week or every month, or even every quarter, as companies decide the best time for them invest in capital investments.

Interest rates in the US has not happened in recent months as the US Federal Reserve has not increased the rate for a few months, and plans to reduce the key rate sometime in 2024.

China is different situation, as it might be going through a period of restructuring, after growing very fast for many years, if not decades.

Perhaps, now, it has reached the stage like Japan and South Korea, and grew too fast without keeping the fundamental foundations for the future.

Have a nice day and be safe!

Bank of Japan Meeting: Updated March 4, 2024.

 

Bank of Japan members at Dec. meeting saw need for policy normalization debate

Article Source: https://mainichi.jp/english/articles/20231227/p2g/00m/0bu/015000c

Ideas:

The Bank of Japan is always talking about change, but for the most part, not much is going to happen soon, especially since Japan has entered another recession from the Oct. to Dec. quarter.

The 2 percent inflation target is related to consumer demand and consumer spending and not companies passing-on their material and labor costs onto the next in the supply chain including the final customer.

The BOJ did increase the bond yields to 1 percent, as most likely, a test to see how the financial markets would respond.

There are not going to be any real changes, only that a minor change here or there, and maybe won't be noticeable to the  general public, if at all.

The financial markets and even the Japanese stock market might be waiting for some change with the current policy of the BOJ, but the BOJ doesn't do things quickly, and may take a long time to make any changes if any at all.

For the most part, maybe the BOJ has been behind the curve for a very long time, and now really doesn't know how to get out of its current situation, without disrupting to financial markets.

Wage increases are going to be the key for what the BOJ decides to do. If the wage increases are significant, it might be enough to spur and change in the current BOJ policy, but maybe not, if the Japanese economy in April has not improved.

The challenges is to get all companies, large, midsize, and small companies, or enough of them, to give wage increases to impress the BOJ to makes some changes.

It seems all the BOJ does is talk about changes, but again, hasn't done much over the past two years or since the pandemic has ended. Its like they are afraid to make any changes for fear of upsetting to financial markets.

They have had many years to examine positive effects and side effect of its current policy. If they can't see now, maybe they will never see what the positive effects are and the side effects.

High prices, from companies passing-on their material costs to the next in the supply chain has been hurting consumption for a very long time, and the BOJ or the Japanese government has not done much and or doesn't know what to do the curb inflation.

Higher prices should be a combination of consumer demand, consumer spending, and companies increasing prices as they see better demand in the Japanese economy, and not just from companies passing-on their material costs to the next in the supply chain.

Japan has been in a state of stagnation and or deflation for many years, if not decades. And companies, for the most part, are to blame, as they been very reluctant to pass-on their material costs to the next in the supply chain.

The Bank of Japan is relying on Japanese companies to increase wages and a way to solve all the Japanese economies challenges, but many Japanese companies might not be able to meet the demand of the BOJ or the Japanese government with wage increases, as many small and midsize companies have profit margins that are just to narrow to increase wages at this time.

Even if the small and midsize companies were to get the subsidies offered by the government to help them with wage increases, it might not be enough, as maybe the subsidies might not cover all of the monthly increases in wages.

Have a nice day and be safe!

Japan Workers Don't Want After Hours Work Contact: Updated Feb. 27, 2024

 

70% of workers in Japan don't want to be contacted by workplaces after hours

Article Source: https://mainichi.jp/english/articles/20231225/p2a/00m/0na/011000c

Ideas:
Even though the pandemic brought about workstyle changes, globally, it also brought the idea of 24/7 contact, which many workers, including Japanese workers don't want or like if they can help it.

For a long time, even before the pandemic, contact after work was the norm in South Korea, but even South Korean workers didn't like it, and now the situation is much better related to bosses not contacting workers after work.

Workers, these days, are looking for better work/life experiences and don't want to stay connected 24/7 even when they just work from home. 

Especially maybe younger workers and or women with children don't want to be contacted after working hours.

In some cases, maybe there are some CEO's or bosses who don't trust those who work from home or a coffee shop instead of working in the office, so as a result, they are always keeping tabs on their workers.

Even those who work in the office, unfortunately, there might be many still who are contacted after working hours when workers are at home or with families or out to dinner with friends.

The days of 24.7 in Japan and South Korea are long gone, but there are some CEO's and bosses who have nothing better do to but interfere in their workers lives with wanting things done yesterday or by midnight in some cases.

Unfortunately, maybe the Japanese government needs to step in a make a law about contact outside of work. But of course there are going to be those who object to the law as it might cause stress on a business. 

But time is come for workers to have positive work/life experiences, and not have to worry about work until they start work the next day.

But again, there are still many companies who might not think positive work/life experiences are good and they might still think the need to contact workers outside work hours is an important activity for the good of the company and customers.

Even with company rules that prohibit contact after work hours there are always going to be who break the rules and do what they think is needed to get the work done, instead of waiting until the next day!

Have a nice day and be safe!

Japan PM Wants More Wage Increases: Updated March 8, 2024.

 

Japan PM asks firms to achieve larger pay hikes in 2024 than this year

Article Source: https://mainichi.jp/english/articles/20231225/p2g/00m/0bu/019000c

Ideas:

Most likely, Japanese large companies will increase wages again, but to what level is not sure yet, Last year it was around 3.5% for wage increases.

The problem is with small and midsize companies who don't have much room in their profit margins to increase wages.

Small and midsize companies makeup around 70% of wage earners in Japan, so that is a significant different in wage increase in Japan.

If the they don't increase wages, there is the continued possibility of income inequality among big company wage earners and small company wage earners, and even more than what it is now.

The Japanese economy has been stuck in deflation and a stagnation mindset for many years if not decades.

At the same time, wages in Japan are some of the lowest among advanced nations, which used to be one of the richest, but ever since the asset bubble crash of 1989/1990 its been a downward spiral for the Japanese economy.

Some would suggest Japan grew too fast in the 1980's and never really recovered from the 1989 bubble crash.

When the economy is not doing good, and everyone notices and sees demand decreasing companies begin to cut prices and then at the same time, they don't increase wages for workers.

But the problem is its been going on for a long time with no real end to deflation at the present time, unless, of course Japan companies do significantly increase wages.

The real world of economics and business is not the stock market but the what ordinary people feel and how much prices affect their real lives.

Ordinary Japanese people have got to see and feel wages are affecting them in a positive way with more disposable incomes and also at the same time, decreased prices where they feel good enough to spend in the economy.

It seems the Japanese government and the Bank of Japan is depending on Japanese companies to get the Japanese economy growing again.

Its not a bad idea as wages increase along with a tax cut and a subsidy for low-income groups might help to spur economic growth.

But its got to be sustainable, and not just a one time situation that might give a small boost or spurt but its got to be more and long-term.

Inflation has been running higher than 3.99 percent or 3.00 percent, so many wage earners are still losing out as their disposable income might not be keeping up with inflation. 

As a result, maybe, consumer spending is not where is should be in Japan, and might not increase much, even if wages increase in 2024, in April, as it takes time wage earners to see the affects of wages on disposable income.

Many large Japanese companies have been sitting on big increases in profits for many years, and some say since the 2008 global financial crisis, and up until April of 2023, many companies didn't increase wages that much, if at all.

And yes, small and midsize companies are not able to increase wages and or increase prices, for fear of losing too many customers.

Private consumption of consumer spending has always been challenging in Japan, as Japan is not a spending country like in the US. 

For example, there is the idea of elderly being more prominent in Japan, as Japan is an ageing society, which might mean less spending among the older groups.

And then there is many in Japan who are not working real full-time jobs but contract jobs, with less benefits and also many working part-time jobs too. All of these groups tend to spend less than full-time large companies workers, which only make up about 30 percent of wage earners in Japan.

There needs to be a complete restructuring of the Japanese economy, to get more full-time full benefits workers, including more women in management positions before the Japanese economy can grow at its fullest potential again.

The Bank of Japan is nowhere near the point of normalizing its policy as the Japanese economy has, again, entered into recession, which is two consecutive quarters of negative economic growth.

Most central banks want to see inflation between 2 and 4 percent, as they feel that's a manageable level. but maybe the Bank of Japan wants inflation to be 2 percent and not 3 or 4 percent where its at now, as maybe too many income groups and Japanese households are too stressed out related to inflation.

In recent years, the Bank of Japan has stated or suggested that the Japanese economy is too weak to handle key interest rate increases like in the US or the EU, as maybe the side-effects of the increase in the key interest rate might be too much for many in the Japanese economy.

And again, as the Japanese economy has entered into another so-called recession, the Bank of Japan, most likely, will not doing anything in the near future, or maybe not much in the first half of 2024, until it sees positive growth in the Japanese economy, along with significant wage increases and increased consumer demand.

Have a nice day and be safe!

Japan Nominal GDP Not Among OECD Highest: Updated Feb. 29, 2024

 

Japan's nominal GDP per capita at record-low 21st among OECD members

Article Source: https://mainichi.jp/english/articles/20231225/p2g/00m/0bu/037000c

Ideas:

At one time, Japan was one of the richest countries in the world, and was running high in the 80's, but since the asset bubble crash and subsequent stagnation and inflation, the Japanese economy keeps falling farther and farther behind other advanced countries.

And then add in its very low birthrate, it doesn't get any better. The only country with a lower birth rate is South Korea, as the lowest in the world.

Both Japan and South Korea have some of the same problems, being less that favorable working conditions for working women, long working hours, low productivity rates, and super expensive costs for children's education.

Both countries seems to miss the point, being the long work hours and expensive children's after school education as reasons for low birth rates.

Most of the countries listed, for the most part, have much better work situations than Japan and South Korea, and much better society and health situations.

Except for the US, with its somewhat dismal medical situation, with super high medicine prices, Japan and South do have very good medical situations, but that hasn't translated into better work productivity or better birth rates.

Its amazing how far Japan has fallen, as back in the late 80's it was expected to be stronger than the US in its economy.

But some have suggested that maybe Japan grew too fast in the 60's 70's and 80's much like South Korea in the 70's 80's, 90's and 2000's. Now maybe China is experiencing the same situation as now it needs to restructure its economy.

Japan, it seems, to fall in terms of percent of global GDP and might continue to fall in the coming years.

At the same time, despite its GDP challenges, the Japanese economy is a fairly stable economy despite all of the noise surrounding its economic growth.

As most Japanese citizens and will probably tell you they are unaware of what going on with the economy other than the effects of inflation on their personal lives.

That's not a negative idea about Japanese citizens, but like most people around the world, they are focused on their own personal lives and or lives of their family members and not about what's going on with the Japanese economy.

The news already, in Feb. of 2024, has said Germany has passed Japan as the third largest economy in the world.

The weak Japan has both positive and negative effects. A weak yen is a positive for exporters as they get more for their sales overseas, but its a negative for domestic prices, as Japan has to import much of what it needs.

The weak yen is a positive for international tourists who go to Japan, as the weak yen, gives them more purchasing power.

The Japanese economy is in the continued inflation situation with no real end in sight other than its slowly decreasing.

But the challenge is consumer spending has always been weak in Japan compared to other advanced economies, and with its low birth rate, and aged society, it doesn't look like its going to get much better.

But if you go to the large Japanese cities, all seems good and normal with consumers spending a lot. The challenges is in the not so populated areas is where the challenge lies related to consumers spending.

Have a nice day and be safe!

Japan Govt. Back to Pre-Pandemic Normal? Updated March 2, 2024.

 

Pivot to pre-COVID normalcy tests Japan's fiscal spending appetite

Article Source: https://mainichi.jp/english/articles/20231223/p2g/00m/0bu/051000c

Ideas:

Many governments always say they are going to reduce spending as a way to reduce their bloated budget, but something always gets the way with emergency programs, or other new emergency situations, and so it never really happens.

And don't expect the Bank of Japan to make any real changes to its currents policy anytime soon as they might make small incremental changes here or there, but nothing significant in the near future.

Companies might, again, increase wages in April of 2024 as in April of 2023, but the challenge will be if small and midsize companies can afford to increase wages.

Whether the Japanese economy moves past the deflation stage all depends on wage increases, consumer demand and consumer spending, and not so much on companies passing-on their material costs.

Current Prime Minister Kishida, might try to depart from the Abe policies, but its going to be hard to change much within the LDP as they control everything. And to be fair, its not known just how much the Japanese Prime Minster can change much, as they need a consensus to change policies.

The Japanese cabinet and the Japanese Prime Minister have never had complete support of the Japanese public, as it seems to the Japanese public is/was resigned to anything changing despite their lack of support for any current cabinet or prime minister.

As far as the US economy goes, the US seems to have move out of its recession worries and the inflation in the US economy is almost back to normal and the US economy, at this time, again, is the strongest economy in the world.

Its normal for societies to get used to the massive support, whether related to the covid situation or any other situation, and many times, it takes a while for society to get back to normal without relying on massive aid programs.

Prime Minister Kishida, like many politicians change when they get into office and have to deal with all of the challenges an economy faces. He might have been a fiscal hawk, meaning, he didn't like a lot of government spending, but again the needs of society change many politicians. 

Many times, in government, people around the president or in this case the Prime Minister don't want to rock the boat and wont suggest any changes against what the Prime Minister wants.

The new 2024 might be the first time in 12 years it has decreased, and might be the second-largest on record, but by the end of fiscal 2024, it might increase a lot more as more spending programs are added, as new emergency situations occur.

For debt-servicing, most likely, as usual, the Bank of Japan will offer and buy more government bonds to cover the costs of the current bond situation.

The Japanese economy, to get out of deflation stage, needs to have an increase in consumer spending, and increase in consumer demand, and a significant increase in wage growth, and not just from large companies but small and midsize companies too.

The BOJ's policy tweak might be a move to help increase the above economic conditions, but maybe they its too much as 1.9 percent, at this time.

Again, even though the Japanese government and the Bank of Japan want to lower the debt, most likely its not going to happen just yet, as there are too many variables that need to be in place yet, before the debt can be reduced.

Government plans never really stay the same, so no matter what the plan is for the future, there are always going to emergency situations that come up that derail budget plans and government spending always increases.

The a long time, decades, the Japanese government depended on the US military and the treaties protecting Japan. But this is a era, with China becoming more of a threat every years and maybe Japan feels it needs to increase it defense spending as a way to deter China.

Tan hikes or sales tax increases are not very popular with the Japanese public as was seen in 2014 and 2019, with a 5 percent increase to 8 percent and a then to 10 percent in 2019.

The time might come with again, the Japanese government feels it needs to increase the sales tax, especially if it can get out of the deflation stage its in now.

Child care and other family support measures are good and needed in the Japanese economy, but until the basic structure of work changes, the current birth rate is not going to increase.

For example, more working women need to feel they can move past the clerical level in companies and into management levels, and that doesn't seem to be happening anytime soon.

The Northern European countries, and many European countries are good examples of society support, but Japan needs to get the fundamentals correct such more women in management positions, more women in the upper levels of government.

You can talk all you want about trying to balance the budget but its not going to happen anytime soon as an increase in defense spending and the extra budget related to a tax cut for the public along with a subsidy for lower-income groups will increase the current debt situation.

There is always concern with the Japanese debt situation, as its the highest among developed countries, but most of the debt, if not all, is owned by those in Japan, as compared to 2010 in the Greece situation, where most of the debt was external or owned by those not in Greece.

The Japanese economy is a very stable economy, and in the near term, is not going to go bankrupt as most of the crediting agencies continue to give the Japanese government high ratings.

The challenge, as always it the future and especially for those on social security or pensions, as to whether the Japanese government will need to reduce pensions like Greece did in 2010 to reduce its debt.

Even though the US key rate and the Japanese key rate are far apart, that might change soon as the US has indicated it will reduce its key rate a few times in 2024, which will lower the difference between the US and Japanese key rate.

The weak yen has definitely decreased Japan's economic power, and it might not change too much anytime soon, other than maybe a shift between the US rate and the Japanese key rate.

The Bank of Japan might not change much, if anything in 2024, as future article after this article suggests that the Japanese economy has entered into another recession with two quarters of a textbook style recession.

As are result, the Bank of Japan, again, most likely is going to keep its current policy unchanged until it can see some real positive changes in the Japanese economy such significant wages increases, an increase in consumer demand and a significant increase consumer spending. 

Have a nice day and be safe!