Japan GDP Estimate: Updated Feb. 28, 2024.

 

Japan eyes FY 2024 nominal GDP above 600 trillion yen, faster income growth

Article Source:https://mainichi.jp/english/articles/20231221/p2g/00m/0bu/024000c

Ideas:

Nominal gross domestic product is GDP plus inflation and as inflation continues to be a challenge for the Japanese economy not a surprise that the GDP had increased.

Inflation might decrease to 2.5 from 3.0 but it might still be too high for most Japanese households and especially low-income groups.

Income growth might be increasing but it is enough, again, to offset the continued inflation in Japan. And will expected wage increases in April 2024, will they be high enough for working people to finally escape the inflation in Japan.

The problem is, many workers in Japan don't work for large companies and for the most part only large companies gave wage increases in April of 2024.

In other articles, it mentions that Japan has slipped to the 4th largest economy, with Germany now third, as maybe its continued inflation has dragged the economy down.

A 70,000 yen handout to low-income families is a good idea but how much can it last and of course there is always the talk of too much debt for the Japanese government.

And a 40,000 yen tax cut too is good but how far can 40,000 yen take a family, with continued inflation in Japan.

The key to escape inflation is wage increases and also demand-led price increases which means consumer demand and consumer spending is increasing and not companies passing-on their material costs to the next in the supply chain, including the final customer.

The Bank of Japan is always going to strike a cautious tone about the economy, as they don't want to cause any harm to the financial or stock markets.

The Japanese economy is, for the most part, a very stable economy, but at the same time doesn't grow that much, and so a contraction in the July-September quarter was no surprise.

At the same time a contraction doesn't mean all economic activity had ceased as there are always pockets of good growth and pockets of less than good growth.

Sluggish demand, too, is no surprise as the Japanese economy is always challenged related to consumer spending and consumer demand.

Also the summer of 2023 was a record for temperatures, which lasted well into late September which means Japanese consumers might have delated buying any late fall or winter clothing.

Capital spending is always cyclical meaning its never every month or even every quarter as companies decide when to spend or wait depending on the current and projected economic situation.

"Abenomics, while needed back a few years ago, might need a new strategy or approach to get the Japanese economy out of its stagnation and deflation situation.

Most might say, there have been many left behind in the Abenomics period as economic growth was seen by all or many in the Japanese economy.

Large companies might have seen the benefits of Abenomics but what about the rest of society and the overall Japanese economy?

The Bank of Japan is going to be very cautious on what is does in the future. There might be some expectations that the Bank of Japan is going to change is ultra-low policy, but any changes at the beginning will be very small and might not even be noticeable among most in society.

Have a nice day and be safe!