Over 70% of firms expect Japan economy to keep growing in 2024
Ideas:
There has been periods of optimism before but many times the Japanese economy disappoints the optimists unfortunately,
But this time maybe, finally, the optimists are going to prevail. There is something about self-fulling prophecy related to an economy. For example, if enough companies and consumers remain optimistic and they continue spend and continue to drive demand, than an economy will shows signs of improvement.
However, the opposite can happen if many companies are pessimistic and consumers remain pessimistic and don't spend or invest an economy can decrease too.
And also, if consumers, Japanese consumers keep hearing and seeing good economic projections that the economy is going to get better, they might begin to feel it or perceive and begin to spend as if the economy is good, and the same with companies and capital investments.
An economy is like a living organism, in that it feeds off of good ideas but decreases if it hears and see too many bad ideas.
Th fact that TSMC is building new facilities in Japan is a very good idea, that they think the Japanese economy in the future is going to increase.
And the more news, like this, that companies are increasing capital investment in Japan, is again a good sign for Japanese society, that the economy is going to get better in the future.
The Japanese economy, of course is an advanced economy, and as such most advanced economies rarely grow faster than 3 percent if even that. For Japan 1 percent growth would be about normal.
Consumer spending in Japan has always been a major challenge, as Japanese consumers just don't spend like those in the west, as Japanese have mostly been savers while those in the west have mostly been spenders.
Japan just revised its quarter 4 stats and moved the Japanese economy out of a recession, with the latest data, after saying the Japanese economy has moved back into a recession.
Wage increases will be important for the Japanese economy to completely move out of the deflation stage and stagnation state too.
Again wage increases will be important to help stop deflation and stagnation in the Japanese economy, but all companies, large midsize and small need to increase wage increases and not just large companies, as maybe 70 percent of wage earners in Japan don't work for large companies.
The Japanese domestic economy is struggling with the weak Japanese yen, as import prices continue to increase or are at a level that many importers are struggling, while exporters enjoy record profits from the weak Japanese yen.
The Bank of Japan will need to balance the needs of importers, the domestic economy, and the needs of exporters, and at the same time, be concerned that if they increase the key rate too much and too fast in the future, if could affect international tourists who travel to Japan because of the weak yen.
International tourists spend a lot in Japan and help increase the Japanese economy. As such the Bank of Japan, has to decide what is a desirable range for the US dollar/yen to keep international tourists coming to Japan and at the same time, make sure the domestic economy and Japanese importers are not too stressed about import prices.
Its a very strategic balancing act that the Bank of Japan has to figure out in the future. as too strong or too weak affects different groups differently in the Japanese economy.
All of this is not going to be fixed with one change in the Bank of Japan's policy as it might take a long time, the most of 2024, to get the mix right for both the domestic economy, Japanese exporters, and international tourists too.
A lot has changed since late November or December as the Japanese economy has gone through many changes and will continue to go through many changes.
What companies say in one month could easily be changed in the next month or coming months as economic conditions change too.
Have a nice day and be safe!
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