BOJ lifts economic views on 2 regions, impact of quake uncertain
Ideas:
Japan is no better or no worse than other economies globally, but Japan has been stuck in a stagnation situation for a long time, and needs more time to move out of the inflation situation too.
Like a market economy, there are always positives and negatives, some companies doing better than other companies, some sectors doing better than other sectors, and its the same with Japanese prefectures, like US states, there are some doing better than others.
Of course the earthquake on the western central part of Japan has affected all of the provinces in the area, and probably has caused major damage to the supply lines in and out of the prefectures.
The key to wage increases might be the smaller companies, as it seems most if not all of the larger companies are going to increase wages in April 2024. So that leaves the smaller companies as the key to wage growth.
If smaller companies and companies in the regional areas don't come through it could be another year of inflation concerns for smaller companies especially those in the rural areas.
If some smaller companies begin to signal/communicate that they are going to increase wages, its quite possible other smaller companies will begin to increase wages too.
Of course the earthquake situation could delay or stop completely any wage increases that some or many small companies had planned.
The Bank of Japan has indicated already that its going in end the negative interest rate policy, but how they do it exactly is still unknown at this time and by how much is in question.
Recovering moderately and recovering steadily are some ambiguous terms as they are of course meant to be positive signs the economies in all prefectures are recovering or improving.
Because many of the respective province economies are concerned by what happens in overseas economies is a good indication that many exports companies are located in many of the Japanese provinces.
The Toyota group and Daihatsu were hit with quality control challenges which halted production in many plants in the Tokai region related to Toyota, but now it seems maybe production is back to normal.
Most likely the Kyushu-Okinawa area had/has a boost in capital investment due to TSMC from Taiwan, with collaboration with the Japanese government, building semiconductor plants in Japan to maybe avoid the impending China/Taiwan war situation in the future.
Japan needs to be very careful, but at the same time its only natural, that when tourism increases as much as it has in Japan, its easy to think it will be that way a long time, but the pandemic in 2020, greatly affected tourism in Japan even though 2019 was a record year for tourism.
Its only natural, that as prices increases, consumers will begin to cutback on buying some things or many things. Consumer spending in the Japanese economy is never that great and is always a challenge for the Bank of Japan.
It seems the Bank of Japan is relying on wage increases as a way to get back out of its inflation situation. The Bank of Japan 2 percent inflation target is related to consumer demand and consumer spending, but consumer spending and consumer demand never seems to be enough in Japan.
The trade union might want a 5 percent increase in wages, but companies never actually give what unions want or need, and maybe this time its the same with maybe 4.0 to 4.5 percent might be the limit for companies, if that.
Again, all Japanese companies need to increase wages and not just large companies, but small and midsize companies too. But the challenge is many small and midsize companies might have profit margin challenges that prevent them from matching what big companies will do in April of 2024.
Have a nice day and be safe!
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