Japan, Exports and Economic Recovery: Updated August 13, 2024.

 

Japan gov't cuts view on exports, keeps economic recovery scenario in July

Article Source:  https://mainichi.jp/english/articles/20240725/p2g/00m/0bu/033000c

Ideas:

This the problem with any economy that relies on one sector for economic growth, as if it decreases, the economy decreases, japan has relied on exports and a major economic driver, and there is not much else, as consumer spending seems to be that strong in Japan.

Japan has tried to rely on foreign tourists, who spend a lot in Japan, but its not enough to really improve economic growth.

Consumer spending, in many advanced economies, is more than 60 percent of GDP, but in Japan its only around 50 percent.

China seems to be going through a major transition at this time, and its economy might not be back to normal for a while.

Unfortunately, the Japanese economy is always up and down and never grows that much each quarter, but at the same time, its a very stable economy and unless there is a major earthquake or something it just keeps moving, but at a very low rate.

The demand for cars in the US will continue to be strong despite some low periods here or there, but , again, Japan is probably too focused on the US market, but of course the Chinese market is lagging behind at this time, and the EU is still not so good too.

Pausing for a pick up is a good way to say things are slow now but will pickup soon, which is normal as even demand for cars is not always strong, and sometimes slows down.

The Japanese economy, recently, is always described as recovering moderately, and to be fair, it never grows too much even in the best quarters.

Japan just came out of the Golden Week period, where there was probably a lot of consumer spending, and Japanese consumers are probably waiting for the summer Obon vacation period to start spending again.

Private consumption or consumer spending is always up an down, and of course now, with inflation still a major challenge in Japan, it might not be where it should be.

Business investment will be dependent on what companies can afford as maybe they are spending a lot on wage increases at this time.

Again, consumer spending or private consumption is not where it should be,  at 50 percent only of GDP, while other advanced economies are at 60 percent or more related to consumer spending, which means at 50 percent, it might not be enough to help the Japanese economy grow.

The residence and income tax cut was good and needed, but is/was it enough to help Japanese families as 40,000 yen is used up very fast with inflation, and its possible, maybe some or many Japanese families did not spend all of it in the economy and might have saved some of it.

It might take some time for wage increases to be felt by Japanese households and or for Japanese households how much of the wage increase to spend in the Japanese economy and how much to save.

The weak Japanese yen of course is a major challenge for most import companies who need to import products, and the weak yen increases import prices in Japan.

It must be remembered, that maybe 70 percent of Japanese workers don't work for large Japanese companies, and maybe 70 percent of Japanese workers didn't get large wage increase that large companies gave, as such the wage increases might not be a big part of the Japanese economy as expected.

The global economy is like one large economy, as there are many economies, like sectors in a country, that are doing good and some of course that are not doing as good.

While China might be having some challenges at this time, the US economy seems to be doing much better and the EU, well the EU is the EU and doesn't do much lately.

Recently, the last two weeks, it was suggested that the Bank of Japan is not going to increase the key interest rate, when the financial markets are unstable, which they have been recently, as the key interest rate increase might be a major challenge for many in the Japanese economy.

Have a nice day and be safe!