Japan Economy Estimate:

 Article Source: https://mainichi.jp/english/articles/20230525/p2g/00m/0bu/091000c

Article:

TOKYO (Kyodo) -- The government on Thursday lifted its view on the Japanese economy for the first time in 10 months, sounding more upbeat about exports and production in May while private consumption remains resilient due to the impact of COVID-19 waning.

In its monthly report for May, the Cabinet Office described the economy as "recovering at a moderate pace," as it upgraded the view on exports for the first time since December 2020.

Ideas:

Exports and production might be improving and consumer spending might also be OK for now but if the inflation challenge continues consumer spending might begin to decrease ove time.

Governemnts, for the most part, always wnat to sound positive as not to influence investors from leaving and going to other/better investment areas.

So the language, "recovering at a moderate pace" is probably a best guess scenario to keep investors happy.

Exporting, while only about 20 percent of the overall economy, is still big enough for all concerned to watch it carefully for  possible trends. Exports maybe since 2020 has not been as good as wanted or needed as exports are very dependent on global demand.

Article:

The government said previously that the world's third-largest economy was "picking up moderately, although some weaknesses are seen." The last time the office used the expression "recovering at a moderate pace" was in February 2020.

The upward revision came after Japan's economy rebounded from a technical recession in the January-March quarter, even though uncertainty remains over the strength of the global economy after aggressive rate hikes in major economies. Financial markets have been on edge amid the U.S. deadlock over its debt limit.

Ideas:

An economy, Japanese economy, is very complex as there are many sectors which all don't increase or decrease at the same linear rate each quarter or each year. There are going be some that improve a lot and some might not increase at all.

Whether positive or negative, most economies, globally, are now very connected to each other as such what happens in the US with its key interest rate hikes can have an affect on the Japanese economy too.

Financial markets are very fickle meaning they are very emotional and react sometimes to any slight, positive or negative, relating to anything that happens now globally, not just domestically.

Article:

A technical recession is defined as two consecutive quarters of negative growth.

The easing of disruptions in semiconductor supply chains has allowed automakers to ramp up production that had to be cut. The May report said production has shown "signs of picking up," an upgrade from April, and exports are "steady," rather than "in a weak tone" a month earlier.

Ideas:

A technical recession is never good, but expect for the inflation challenges did anyone feel or know there was a technical recession. Sometimes, the media might say there is a recession but the public might not know it or even feel it.

By now the semiconductor industry and automakers should have been able to solve their supply chain challenges so that if there are shortages or potential for shortages in the future they alrealy have plans on how to prevent such challenges again.

Again the language used might be just to keep investors happy and keep them from moving on to other investment areas.

Article:

A revival of inbound tourism has also lifted exports as spending by foreign visitors in Japan is treated as exports.

Private consumption, a major driver of growth, also saw an upward revision the first in 10 months, as the report said it is "picking up."

Rising prices of everyday goods come as a blow to households but consumption has been supported by pent-up demand, especially for services such as dining out and going on trips, economists say.

Ideas:

Japan might not reach the 2019 level of 19 million foreign visitors but they will probably get very close to it. 

As the Japanese yen is weak now, its a strong magnent for foreign visitors going to Japan as the weak yen allows vistors to spend more in Japan which of course increase economic activity and the Japanese economy overall.

Private consumption or consumer spending is big in any major economy but not as big in Japan as it should be because of inflation and of course because of low wage growth.

If the wage increases actually take place it will help some but as many Japanese wage earners might not work for major companies, there might be a large portion of the Japaneae population without wage increases which might lesson consumer spending in the Japanese eonomy.

Pent-up demand might be strong now, but as inflation challenges continue and as the pent-up demand begins to wane, there might be less spending eventually.,

Article:

In early May, the government started treating COVID-19 the same as seasonal flu under the law, meaning that it has no authority to ask those testing positive to stay in hospital or quarantine.

The office continued to warn that "full attention" should be given to inflation and developments in financial markets, but dropped its reference to supply chain bottlenecks.

In the latest report, the global economic view was lifted for the first time since August 2021, saying that it is picking up despite weakness in some regions.

Ideas:

Many countries might have not treated the pandemic in the best way possible as it was all very much an experiment in how to do it correctly. But maybe the next time countries now have a better understanding how to handle a pandemic.

If Japan was taking inflation serisously there shouldn't seem to as much attention to trying to solve it compared to the US and the EU.

But to be fair what the US and the EU have tried to do also not worked yet or not that well.

Maybe Japan's approach is like someone with a cold, or the flu, with the idea of just let  inflation runs its course like the flu or a cold and it will eventually solve itself, as increasing the key rate also has some major side affects like taking medicine to get rid of the flu,which some might think the medcine feels worse than the actual flu or cold.

Have a nice day and be safe!