Japan Ideas: Updated Aug. 28, 2025

Firms believing Japan economy growing falls to 30% amid tariff woes

Article source:  https://mainichi.jp/english/articles/20250810/p2g/00m/0bu/026000c

Ideas
The Japanese economy never grows that much or that fast and now with the tariff situation it might grow even slower.

Japanese companies might have to re-set what they think is good economic growth and or communicate to their stockholders that earnings as before are not going to be the same.

And companies, if they are thinking of absorbing the tariff costs, can only do it for so long before their profit margins begin to suffer and they have to pass-on the tariff costs to the next in the supply chain.

Surveys are good and needed and important but they don't tell the whole story as companies are made up of people and people can change their minds as the business environment can change quickly sometimes.

It also must be remembered that companies who are doing good during the survey might think the economy is good while those companies that aren't doing good might think the economy is not doing so good.

The Japanese economy has been flat for a very long time with little or very little economic growth, as the past 30 years have shown.

Solid business performance is always needed and good but it might take Japanese companies to be more creative and even begin to innovate so that productivity is the real economic driver for Japanese economies.

Companies that rely on normal, business as usual business activities might be left behind in the new global trade situation that has been created.

It can no longer be business as usual for Japanese companies and they can't rely on old practices to keep them afloat as they need to find ways to innovate and allow innovation to be the the key economic driver for them.

Yes, the global economy is in a new-normal and Japanese companies will need to find ways to grow and even find ways to adapt and change to the new global economy.

Nothing stays the same in business or the real world and the sooner Japanese companies find ways to adapt, innovate, stay ahead of the curve the sooner they can get back to being titans of the global economy like they were many years ago.

At one time Japan had some of the largest companies in the world but somewhere along the way they lost their way and now only Toyota is listed as a top global company.

For a long time many Japanese companies were reluctant to increase prices and they felt their customers would not like it so they absorbed cost increases for many years.

But those days are long gone as company profit margins have shrank and stockholders are demanding a prescribed level of profits each quarter.

And yes, the labor shortage has forced companies to increase wages for existing employees and to get new employees to work for them in the future.

It has been suggested that for a long time Japanese companies were sitting on large sums of money and not really paying their employees the wages that were needed to help the Japanese economy grow.

So maybe now, finally, Japanese companies have decided that to grow the economy and grow their business are equally beneficial pursuits.

Again, while the wage increases are needed and good they can't make up for the number of years that companies gave either very low wage increases or no wage increases at all.

It all adds up with a synergy effect taking place after too many years of low wage increases and or no wage increases at all affecting the Japanese economy.

And again, that 5.25 percent wage increase might be considered good by some and maybe that is all some companies can do, but if companies had been giving reasonable wage increases all along maybe the 5.25 percent might have been adequate.

Real wages are very important for the Japanese consumer and of course Japanese workers as it indicates their purchasing power or how much they can really spend in the economy.

The Japanese economy has dug itself into a major hole and it's going to take time to dig its way out and there needs to be even more wage increases for all workers in Japan.

For example up to 70 percent of the Japanese workforce doesn't work for the large name-brand companies but small and mid-size companies that maybe can't afford to pay the same wage increases as the large companies do.

Which means the Japanese economy is kind of stuck with two realities, the haves, the large company workers and the have nots, the small and midsize workers what don't have the same wage increases as their large companies workers do which then means less disposable income left to spend in the Japanese economy, which then means less economic growth in the future.

Have a nice day!