Japan Economic Growth: Updated Nov. 22, 2023.

 

Japan's April-June GDP revised down to 4.8% growth

Article Source:  https://mainichi.jp/english/articles/20230908/p2g/00m/0bu/026000c

Article:

TOKYO (Kyodo) -- Japan's economy grew an annualized real 4.8 percent in April-June, revised down from 6.0 percent reported earlier, hurt by weak capital spending and private consumption, the Cabinet Office said Friday.

Real gross domestic product, adjusted for inflation, increased 1.2 percent from the previous quarter, compared with the preliminary reading of 1.5 percent. GDP is the total value of goods and services produced in a country.

Ideas:

All economies like to annualize GDP for the year, kind of an optimistic project or what might happen if the economy grew the same each quarter. But rarely, if ever, does an economy in each quarter grow at the same rate.

Capital spending is never linear or follows as straight line upward, as there are always stops and start and or all companies don't spend on capital spending at the same time.

Weak capital spending could be a sign that companies are worried about the future and don't want to spend until they see improvements in the economy.

At the same time, if they have invested a lot in wage increases they might not have that much left for capital spending at this time.

Private consumption or consumer spending is always a challenge for the Bank of Japan and the Japanese government, as it seems Japanese consumers are always weary of economic conditions and or inflation has taken away too much extra spending.

Article:

The world's third-largest economy expanded for the third straight quarter. But economists warn that the state of the economy is not as good as the headline figure suggests due to the relative weakness of domestic demand.

Slowing growth in China-bound shipments is raising concern about the Japanese economy, adding to the negative impact of aggressive interest rate hikes in the United State and Europe to fight surging inflation by curbing demand.

Ideas:

What the numbers say, such as an increase in GDP growth, might not be the reality in the lives of households as inflation continues to be strong in Japan, and as a result, weak demand is continuing after a short period of consumer spending when the Japanese government lifted the pandemic situation.

Consumer demand has always been a challenge for the Japanese government and the Bank of Japan to try and solve and Japanese consumers just don't spend like US consumers, and consumer spending is only about 50 percent of GDP in Japan compared to over 60 or more in the US.

The Chinese economy has it own challenges at the present time, and Japan needs to move on from China, for now. and focus more on the US which seems to have good economic growth.

Yes, the US Federal Reserve keeps increasing the key rate to cut inflation, but consumer demand is still strong in the US and maybe the EU too.

Article:

Private consumption, which accounts for more than half of GDP, fell 0.6 percent, revised downward from the 0.5 percent drop reported last month.

Capital investment declined 1.0 percent, revised down from a 0.03 percent increase.

Ideas:
Private consumption or consumer spending in Japan, just doesn't increase economic growth like it does in the US as Japanese consumers/households are more savers than spenders. 

And as Japan has been facing increased ageism, meaning the population is getting older, older people tend to spend less than younger people.

A decrease in capital spending by 1.0 percent should not be seen and major problem as capital spending increases and decreases each month.

An economy is very complex with many different sectors and many different companies who have different spending priorities and don't spend exactly the same for each company.

Article:

Pent-up demand after the COVID-19 pandemic has likely supported private consumption despite a cost-of-living crisis that has coincided with the country's first summer vacation without antivirus curbs in three years. Real wages have been falling for months as inflation, driven largely by high import costs, remains elevated.

Ideas:

Pent-up demand, while good for a while, might have begun the decrease as the continued reality of inflation, higher prices in the economy and people's lives have continued to be part of the economy.

Real wages continue to decrease, even though most large companies gave wage increases of 3.5 percent.

It should be noted that maybe 70 percent of the workforce in Japan didn't get a wage increase as maybe only large companies gave wage increases.

Because the variance between the US Federal Reserve currency and the Japanese are causing the higher import prices in the Japanese domestic economy.

Article:

Prime Minister Fumio Kishida is aiming to compile fresh economic measures to alleviate the pain of rising prices felt by households. The government has decided to extend subsidies beyond this fall to lower gasoline prices, partly blamed on a weaker yen that has inflated the prices of imported crude oil.

Nominal GDP growth in the quarter was revised to 2.7 percent, down from 2.9 percent. On an annualized basis, the economy grew 11.4 percent, slower than the previously reported 12.0 percent.

Ideas:

The government can only do so much in a market economy, of maybe they need to be careful about how much they intervene in the economy without affecting the economy too much.

Subsidies are good, but are they enough to help households with inflation keeps increasing.

Again, any government must be careful about how much it helps and or how much it affects the normal market economy situations.

Again annualized growth is never the end result of the economy as annualized growth is never what happens by the end of the year.

Have a nice day and be safe!