Japan July-Sept. GDP Growth: Dec. 16, 2024.

Japan's July-Sept. GDP growth revised up to annualized real 1.2%

Article Source: https://mainichi.jp/english/articles/20241209/p2g/00m/0bu/012000c

Ideas:

Japan is an advanced economy and advanced economies don't grow as fast a emerging economics. For example China, maybe is still considered an emerging economy and has been in the 5  to 6 percent growth range which is common for emerging economies.

Annualized growth is not the final result of what could happen as its only an estimate if the Japanese economy would grow each quarter the same amount.

But even a 1.2 percent, that might be a good number for Japan, as it has been stagnant for a long time.

Capital investment is never seen as being a component that will grow each month or each quarter as it depends on what companies think and feel if they want to invest or not.

Perhaps Japan is back in the semiconductor game again as since the pandemic they had a lot of starts and stops related to conductor shortages and shipping challenges too.

If Japan GDP does reach a 1.2 percent growth for the calendar 2024, year, that would be good start for Japan finally coming out of its stagnant period.

Inventories is a trickly metric as too much or too little could be a sign of something not so good. For example if inventories were to grow too much that might indicate that companies over-estimated demand for their products and in reality demand is not so good.

And the same can be said for inventories less than expected, as again, companies might have underestimated demand for their products and not they are playing catch-up and trying to meet demand.

Its interesting that maybe Japan includes foreign spending as an export item, just Japanese cars sold in the US or the EU.

Private consumption or consumer spending might be half of Japan's GDP, but recently it doesn't help the economy grow, Perhaps if consumer spending was more the like 55 or 60 percent of Japan's GDP then it might make a difference in economic growth in Japan.

Regarding auto sales, they are a durable purchase and not something like going to the supermarket every week to buy food, as most car buyers might buy a car once every five years, if even that these days.

The Japanese economy might actually be recovering but it has a long way to go with inflation in Japan still a major challenges for Japanese consumers.

Japan might be on a moderate growth path but its been there before and many times the growth has stalled for one reason or another.

Wage hikes are good and needed but it must be remembered that 70 percent of the Japanese work force don't work for large Japanese companies but small and midsize companies, which didn't get the large wage increases that the large company workers got.

And some of the wage increases at the small and midsize companies were not enough to overcome what the inflation situation is in Japan now.

The Bank of Japan moves very slow and it will not make a decision that could upset the financial markets in Japan or globally too.

Again, consumer spending is not where it should be in Japan as there are always mixed signals as some say if improving and some say its not where it should be yet.

Nominal GDP is GDP plus inflation as it doesn't show the real GDP as the real GDP will show just what Japanese consumers have at this time, and just what their purchasing power is now, which the nominal doesn't show.

Have a nice day!