Bank of Japan View: Updated July 12, 2024

 

Bank of Japan ups econ views on 2 areas despite inflation, weak yen

Article Source:  https://mainichi.jp/english/articles/20240708/p2g/00m/0bu/028000c

Ideas:

All economies have different regions which produce more than other regions and Japan is no different. Tokyo might be the financial center of Japan, Osaka might be business hub, and Nagoya is definitely the manufacturing hub of Japan. while the other regions in Japan, no less important, contribute in many different ways.

Most economies, including the US are a mixed picture as California might be a significant economic driver in the US while the deep south area of the US might not be so much. However it seems Texas is becoming like California in many ways.

Private consumption might be resilient, but is it resilient in all areas of Japan, it all regions in Japan these days. Private consumption or consumer spending is always a challenge for the Bank of Japan.

Wage increases seem to be increasing but are Japanese households spending or are they just saving?

It might take some time for the Hokuriku region to fully recover and get back to some kind of normal, as it seems there are a lot of small and mid-size businesses, mostly suppliers, in that region.

The Kinki region seems to be doing very good doe to the increase in foreign tourists in Japan, and the weak Japanese yen.

The challenge, these days, is some local Japanese might be getting tired of all of the foreign tourists, as there are some who don't have good manners or follow the rules, and or leave trash everywhere.

But of course, back before the pandemic, many Japanese tourist spots became too dependent on foreign tourism, especially from China, and when the pandemic hit, many of the tourist businesses in Japan were hit very hard and had to close and or layoff workers.

The Japanese car industry, which was hit by the safety data scandal most likely will be OK, and the Japanese car industry is the main economic driver for the Japanese economy, and demand in the US for Japanese cars remains very strong,

The Hokkaido and Shikoku regions are not strong economic drivers in the Japanese economy, and in this case a region that is a economic driver produces a lot and significantly contributes to the Japanese economy.

As such, maybe consumer spending is much less in those regions than other regions in Japan, as maybe there are not a lot of large or major companies in those regions.

An economy is very complex, and usually not all parts of an economy are all running the same, as some will be better than other areas, such as some sectors might be doing very  good while some sectors might not be doing so good.

The weak Japanese yen is both a negative and a positive in most economies. For example, the weak yen is a positive for Japanese export companies as they can more for their products, for example in the US.

And of course it brings to Japan many foreign tourists as the weak yen give foreign tourists more purchasing power and they can spend more in Japan, which of course is very good for the Japanese economy.

The weak Japanese yen is a negative for the Japanese domestic economy and Japanese import companies, as Japan is a resource-poor country and has to import much of what it needs from food, raw materials to make products, and energy products too, as the weak yen increases the prices on imported products.

The Bank of Japan, might have its meetings, but its not going to do anything too drastic, as they don't want to upset the financial markets with anything that is not normal or might cause some side-affects in the Japanese economy.

Wage increases, which came about in April, for the most part, maybe are beginning to see of ripple effects in the Japanese economy as Japanese workers might be starting to spend more as they feel better about their wage increases.

However, it must be remembered, most workers in Japan don't work for large name-brand companies, but small and mid-size companies as they probably didn't get the same wage increase as the large company workers did.

Which, means, like any market economy, the Japanese economy is an economy of haves and have-nots which could be factor in consumer spending in the Japanese economy.

Have a nice day and be safe!