Japan keeps economic view in Sept., cautious about global outlook
TOKYO (Kyodo) -- The government on Tuesday maintained its assessment of the Japanese economy as recovering moderately, supported by resilient domestic demand, while it warned of downside risks from slowing Chinese growth and monetary tightening abroad.
The same assessment has been used for the fifth straight month in September. The Cabinet Office upgraded its view on corporate profits for the first time since March 2022, saying they are "improving as a whole." But rising material costs led the view on housing construction to be cut for two months in a row to "weak."
Ideas:
Using the phrase "recovering moderately" is maybe a a way to not cause panic in the financial markets as most central banks or government economic agencies want to be somewhat positive, even if the economy is not doing so good.
Resilient domestic demand is not surprising, but it is because of continued inflation in the Japanese economy. Perhaps Japanese consumers are getting used to the higher prices after decades of de-flation in the economy.
The Chinese economy is still a mystery as to what is going on there and if and when will the Chinese economy get back, if ever, to solid economic growth.
The US has not increased its key interest rate lately although, of course, its still very high especially compared to Japan at near zero rates.
Corporate profits might be increasing as maybe material cost are finally beginning to decrease and of course with maybe continued consumer spending in the Japanese economy.
But, at the same time, the housing market might have some challenges with increase materials cost, as maybe housing construction companies have to import all of their raw material needs, which of course has increased significantly.
Article:
Japan's economy grew for a third straight quarter in April-June, but economists expect the momentum will slow in the current quarter to September.
The government plans to draw up a fresh economic package in October to cushion the blow from inflation to households and businesses.
Ideas:
Anytime the Japanese economy shows economic growth its good because for many years economic growth was barely at 1% if that. So three months of any kind of growth is a positive.
The April to June quarter is usually and period of vacation time and the Obon season which usually results in a lot of domestic travel and a lot of consumer spending.
The current quarter, usually is a somewhat slower period of growth as households don't travel that much and maybe spent a lot in the previous quarter and or are now saving up to spend in the upcoming holiday season, which includes a lot of end of year gift giving.
The Japanese government has had month, if not years to come with some strategies to decrease inflation but they have been a little slow to do it.
Article:
The Cabinet Office used the same expression that consumer prices are "rising" in the monthly report, though it now says wholesale prices have been "flat" recently, a change from "declining" in August.
The report retained assessments on other key components of the economy. Private consumption and capital investment are both "picking up." Exports, which have aided the recent economic recovery, show "movements of picking up."
Ideas:
Consumer prices have been increasing for at least two years, and or course they have to say "rising, as way to inform whomever, that inflation is still a major challenge in the Japanese economy.
Wholesale prices might be "flat" which might mean they are not increasing as fast as before and or have bottomed out recently.
Private consumption of consumer spending is not strange, but at the same time, with inflation continuing in the Japanese economy, maybe again, Japanese consumers have gotten used to the higher prices after years of deflation or low prices.
Company investments or company investing again, only happens when companies feel the economy is on the right track or is beginning to improve. If they don't see that they will take a wait and see approach to investing.
Japanese exports is a major economic driver for the Japanese economy, meaning exports are very important, but at the same time, might only make up 20 percent of total GDP, but still high enough that it helps with economic growth.
Article:
China's slower-than-expected economic recovery since the end of its "zero-COVID" policy and troubles in the real estate sector have raised concerns about growth prospects for the global economy.
Ideas:
Perhaps China had many years of very good economic growth, but at the same time, if there were signs of areas with weakness, such as the housing and real estate market, they were ignored or not looked at carefully, as economic growth was still good enough to not worry about some parts of the Chinese economy.
Perhaps also maybe the Chinese economy has not fully recovered from all of the challenges related to the pandemic and how it affected the economy.
It might take another year or two, for the Chinese economy to get back to where it was during the 2019 before the pandemic.
Article:
The Organization for Economic Cooperation and Development recently cut its outlook for 2024, citing sluggish Chinese growth.
In the September report, the Cabinet Office retained its view on the global economy, saying it is "picking up despite weakness in some regions."
Ideas:
Perhaps, as most all emerging economies grow, and historically all economy grow, China may never see the significant growth it had in years past. Perhaps it has now dropped for the 6 and 7 percent growth to now 4 and 5 percent growth as the Chinese economy begins to more toward the advanced stage from a merging economy stage.
But only time will tell as again, China's domestic economy has a lot of significant challenges to overcome in the future.
The global economy, like any domestic economy, has many parts and many sectors, so some areas might be doing better than other areas. For example the US might still be a bright spot in the global economy, but of course China is not at this time with its domestic economic challenges.
The EU, recently, has not been that robust as they seem to be bogged down with the Ukraine situation and continue inflation and less than ideal economic growth in most EU and or European economies.
Have a nice day and be safe!
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