Japan Government Economy View:

 Article Source: https://mainichi.jp/english/articles/20230221/p2g/00m/0na/061000c

Article:

TOKYO (Kyodo) -- The government on Tuesday retained its monthly assessment that the Japanese economy is "picking up moderately" despite some weakness while changing its wording on wholesale prices for the first time in about a year to reflect slower price growth.

In the economic report for February, the Cabinet Office maintained its assessments of 11 key components of the economy, ranging from private consumption and corporate spending to production and exports.

Corporate goods prices "are rising at a slower pace recently," the report said, a change from the previous month's expression that they are "rising." The last time the Cabinet Office modified its wording on the segment was in March 2022.

Ideas:

The economy might be picking up moderately but to that is all its going to do and any large and advance economy is not going to grow like it did in the past.

But even a economy the size of Japan, with the 3rd largest economy in the world is still a lot of economic activity. It might not reach 4 percent or even 3 percent of GDP growth but a 1.5 and or 2 percent economic growth is still very good for Japan.

There are always going to be some weaknesses in any economy as not all sectors grow at the same rate every month or every year.

Wholesale price increased might have slowed some but most likely they are still too high for most consumers and or consumer sentiment is not so good because of the increase in prices.

Article:

Wholesale prices "remain at high levels compared with a year earlier but are flat from the previous month," a government official said.

The prices of goods traded between companies tend not to affect consumer prices immediately, and economists expect consumer inflation to remain at high levels for some time. The office said consumer prices are "rising," leaving its wording unchanged from January.

The report came after data released last week showed Japan's economy rebounded in the October-December quarter but lacked strength, with gross domestic product increasing an annualized real 0.6 percent.

Ideas:

Wholesale prices might be flat but they are still too high for some businesses and some consumers and inflation related to the import products is still too high.

The US exchange rate and Japan exchange rate situation is not helping imports in Japan which make prices higher than what they should normally be in a normal situation.

The Japanese economy might have rebounded, somewhat, but "lacked strength" is probably a good description of where the economy is at this time.

An annualized rate of 0.6 for the Japan's GDP is still not bad but not good too. At least its not a negative figure. It continues at it present pace Japan should be somewhat OK with somewhat moderate growth.

Article:

The Cabinet Office had downgraded its assessment of the overall economy in January for the first time in 11 months, saying it was "picking up moderately, although some weaknesses have been seen recently" due to a drop in exports caused by surging COVID-19 cases in China.

Despite broadening price hikes hurting household sentiment, the office said private consumption "is picking up moderately," helped by a recovery in service demand that was depressed amid the COVID-19 pandemic. Corporate investment, another key component of domestic demand, is "picking up," it added.

Monetary tightening by the Federal Reserve and other central banks has fueled recession fears, though recent U.S. data have shown the world's largest economy remains resilient.

Ideas:

Exports are always going to be in the news as exports are a prime driver of the Japanese economy despite Japan have a large domestic economy too. 

Perhaps as all economies around the world move away from the pandemic situation global trade might get back to the 2019 level before the pandemic.

Private consumption or consumer spending might be picking up but can it be sustained at level enough to help the economy grow or is it now just latent spending after the pandemic situation.

Corporate investment also needs to be sustainable for a long term period for better overall economic growth. But will companies continue to invest or is it just a momentary glitch or one time thing as not then companies reduce their corporate investments.

Article:

 Economists expect slower growth for China, a major trading partner for Japan.

"Exports have been on a weakening trend recently," the report said.

Ideas:

China may grow like it did in the past which is historically common for all economies. As it moves from developing to other phases it takes more and more resources to grow the economy along with more and more sectors beginning to see more ups and downs and not always constant linear growth as before. 

We wee this in the Chinese construction and housing market which has/had rippling affect globally.

And then add in the continuous increase in labor cost in China as some companies might begin to think about moving other economies such as Vietnam. 

Export and China are always a concern, because of the political situation and of course the pandemic situation. 

It would be wise for Japan not to put all of its eggs in one basket or rely too much in trade with China but continue spread out it exports as much as possible. 

Have a nice day and be safe!