Japan Economic Growth:

 Article Source:

 https://mainichi.jp/english/articles/20230309/p2g/00m/0bu/020000c

Article:

TOKYO (Kyodo) -- Japan's economy grew an annualized real 0.1 percent in October to December, downgraded from an expansion of 0.6 percent reported earlier, the Cabinet Office said Thursday, as private consumption growth was slower than initially thought.

Real gross domestic product growth, adjusted for inflation, stood at 0.02 percent on a quarterly basis, revised down from 0.2 percent. GDP is the total value of goods and services produced in a country.

The world's third-largest economy rebounded from an unexpected contraction in July-September but lacked momentum.

Ideas:

Private consumption or consumer spending is never as robust as it good be in Japan mainly because Japanese consumers don't spend like they do in the US and Japan is an ageing society situation as older consumers don't spend as much as younger consumers.

Real gross domestic growth at 0.02 percent or mayb 0.08 for the year if it holds is about what  the Japanese economy can expect and nothing much. 

Even at 0.02 percent that is still a lot of economic activity for the 3rd largest economy. It takes more and more resources to grow and economy and the Japanese economy is now and has been an advanced economy for a very long time and it may be in stagnant growth period and it might need a paradigm shift in innovation and productivity to grow more.

Article:

Accelerating inflation has been hurting household sentiment, even as a recovery in demand for services that was depressed in the midst of the COVID-19 pandemic has been supporting consumption, a key driver of economic growth.

Private consumption rose 0.3 percent, slower than an earlier reading of 0.5 percent.

Capital spending, another major component of GDP, fell 0.5 percent, unchanged from its preliminary reading.

Ideas:

Household sentiment and or consumer spending is constrained by low wage growth and or constant inflation which eat in households extra income after the month bills are paid. 

Consumer spending is estimated to be 50 percent of Japan's GDP or gross domestic product but its always the weak link of GDP compared to other advanced economies.

If wages are, as reported, going to increase, that can or could help with consumer spending and or if inflation is kept in check or doesn't increase too much where consumers feel good about the wage increase and will get out and about and start to spend again.

Capital spending is always up and down depending on which companies are spending and what time of year as all companies don't spend the same amount every month.

Article:

Prime Minister Fumio Kishida is considering drawing up additional inflation relief measures as households are feeling the pinch of higher prices for everyday goods.

Based on the view that the recent inflationary pressure will ease later this year, the Bank of Japan has stuck to its ultralow interest rate policy, a stance that governor nominee Kazuo Ueda is expected to maintain.

Ideas:

Government policies can be a positive and or a negative in a market economy. Too much government interference would constrain a market economy, yet not enough could also hinder a market economy.

 When and how is always an art and not a science in how to fix/help and economy and it takes time for government interventions to take effect.

The Bank of Japan, whether good or not so good as been saying for the last two years the inflation is only a temporary situation. 

The Bank of Japan might be keep the rate low as a way to ensure that the currency exchange rate, at a low rate, helps or benefits exporters as they can get more profit with weak yen.

Yes, it's not good for importers, a weak yen, but the positive is consumers and companies buy the energy or products brought into the country and importers can still some kind of profit out of it.

Article:

Public investment dropped 0.3 percent, smaller than the decrease of 0.5 percent announced earlier.

Nominal GDP expanded 1.2 percent, or an annualized 4.7 percent, downgraded from 1.3 percent and 5.2 percent, respectively.

Ideas:

Public investment is always another area that is not the same every month as companies bid and then decide when they want to start projects. Not every company start and project at the same time. 

Nominal GDP is of course related to inflation and GDP growth. So even at 1.2 percent or 1.3 percent we can see inflation compared to the real 0.02 percent mentioned earlier.

It's important not to get too caught up in the monthly or even quarterly numbers as we  can loose the idea of the big picture about the economy.

The Japanese economy is still the 3rd largest economy in the world with a lot of economic activity taking place everyday. 

If we nitpick economic indicators too much we lose the big picture thinking and what is really going on with too much emphasis on this or that indicator each month.

Have a nice day and be safe!