Japan Economy Growth: Updated Feb. 19, 2026.

Japan's economy grows 0.2% in Oct.-Dec., spending edges up, exports weak

Article source: https://mainichi.jp/english/articles/20260216/p2g/00m/0bu/026000c

Ideas

The Japanese economy is a very stable economy but because its both a mature economy and seems to be stuck in a somewhat stagnant mode it doesn't grow very much as a 0.2 percent annualized growth indicates.

Annualized growth is just a projection of estimate of what the growth would be for the entire year and 0.2 percent, again, is not that much, but at the same time as the Japanese economy is one of the 5 largest economies in the world that might still be considered a lot of economic activity.

And yes, unfortunately, exports and especially auto shipments to the US decreased as it was not a surprise and has been expected ever since the tariff situation went to effect.

The real surprise might be related to personal consumption or consumer spending increased even through inflation in Japan continues to be a challenge for Japanese households and consumers overall.

Again as Japan is a very mature economies it doesn't grow that much as it takes a significant amount of resources related to business investments, consumer spending, foreign investments in Japan to grow the economy.

And an increase of Japan GDP of 0.1 percent for the July-September period is about what Japan's GDP has been doing over the last few years, so its no surprise as again, the economy seems to be stagnant or stuck in a rut and can't seem to get out of it, and now with the US tariff situation placing more constraints on the economy is going to take even more resources to get the economy moving again.

Not to criticize or be negative but economy growth estimates or projections can sometimes be like a crap shoot as you just don't know exactly what's going to happen in the future as you are dealing people and behavior and its a very complicated situation to estimate.

But a forecast of 1.48 percent might have been a little too positive as even the best of times recently hasn't seen that much annualized growth. But at the same time, there is always some kind of pressure to make the estimates, forecasts, or projections sound better than what is really happening as a way to keep the financial markets happy and not go into some kind of nose-dive.

As the article suggests you can easily see the difference between nominal GDP growth which includes inflation and real GDP growth without inflation. So inflation in the nominal GPD was about 3.4 percent which is where most articles have suggested inflation has been at in Japan for a long time or ever since the pandemic at least.

And again, an real GDP of 1.1 percent is about where the Japanese economy is at and probably is not going to grow more than that as even at 1.1 percent that might be considered a positive as that is still a lot of economic activity for the 4th or 5th largest economy in world.

Private consumption or consumer spending, while yes, maybe half of the economy, is still not where is should be as it should be even more at about 55 or even 60 percent of Japan's GDP but unfortunately, due to an ageing population and other factors such as inflation and or the fact that traditionally the Japanese are more savers than spenders it hasn't been a able to get to 55 or even 60 percent where is really should be.

As far as mobile phones are concerned it can be suggested that the I phone has taken much of the market share in Japan and maybe Samsung has some market share and yes, even maybe some Chinese mobile phones are making some in-roads in Japan these days.

For accommodations, the huge increase in foreign tourists might be boosting the hotel industry as each month it seems is a new record in Japan for foreign arrivals.

And its no surprise that spending has been in decline due to the increase in supermarket price increases as Japan has to import much of what it needs, including food resources and importers and wholesalers pass-on their increased costs to the next in the supply chain including the final retail customer.

And yes, as the US tariff situation has hit Japan, even the domestic car market is feeling the effects as domestic car dealers might be under pressure to increase prices to make up for the losses in the US, which of course means Japanese consumers might be less than happy about buying a new car now or even leasing a new car now.

Personal consumption or consumer spending is always a little slow as Japanese consumers just don't spend like US consumer or more like how US consumers used to spend as even in the US inflation has reduced spending somewhat there too now.

At the same time, higher wage increases in Japan is not going to be a guarantee that it will improve consumer spending in Japan, as it must be remembered that up to 70 percent of the Japanese workforce doesn't work for the large name-brand companies but for small and mid-size companies which don't have the profit margins needed to match the wage increases of the large companies in Japan, As result inflation is still going to be a major challenge for most Japanese households.

Yes, salaries will probably increase in April but not to the level that is going to diminish the inflation situation and especially for the 70 percent or so that work for small and mid-size companies as they will continue to struggle with inflation which means their disposable income is going to continue to be challenged and their purchasing power is also going to be compromised in the future.

But to be fair, its going to take more than the 5 plus percent increase in wages, given out last year, to help all Japanese households as again, the small and mid-size companies just don't have the resources needed to match what the large companies have in Japan, which again, not to continue to beat same tune, but consumer spending is not going increase that much unless all Japanese households or all Japanese consumer can get a significant wage increase in April and not just the large companies workers in Japan.

Yes, its possible prices could begin to decrease during the January-March period, but like the article suggests consumers have got to see and feel that its going to last and not just a one month situation and that could take several quarters before Japanese consumers are convinced that prices are finally decreasing as they will see it in their disposable incomes and in the increase in their purchasing power at the the supermarket. 

And yes, its possible the effect of the US tariffs on Japanese auto shipments to Japan has not been as bad as expected, but at the same time its still more than what it was before the US tariff situation took effect or before March/April 2026 when the tariffs were suggested.

And then there is always the idea that demand for Japanese autos might have just hit a mild downturn which happens sometimes as consumers might have taken a short break from buying a new car in Japan. And there are many variables that could be the reason for the weak auto shipments and not just the US tariff situation.

The article doesn't say if the cabinet official is form the US or from Japan, but the language used suggests its a US cabinet official and of course the person is going to suggest the tariffs are having an affect on Japanese autos or consumers, but again, that's just one person's opinion.

And yes, are are still significant uncertainties in how all of this is going to play out in the long-term as unfortunately, due to past behavior of the US powers to be can change the tariff situation in their favor tomorrow if they want or need to.

Yes to be fair, as with any situation, most likely Japanese consumers are not sitting around thinking about the US tariff situation as they have their own lives to manage and live without all of the noise in the media these days.

Yes, these days everything is now interconnected which means what happens in China affects EU countries and what happens in Brazil affects countries in Asia and so on, and its a hyper connected world today and there is no country that is alone as what happens unfortunately in one country can affect another country very quickly.

And as the supply chains globally are so hyper-connected that if there is a glitch in trade or even the supply chains it/they can have significant major outcome all through the trade zones as or the global supply chains now.

Not all foreign tourists that go to Japan are big spenders as some might be there on limited budgets, but for the most part, the Chinese in the past, with their income increasing significantly, have been the biggest spenders in Japan, but as Chinese tourists going to Japan has seen a significant decrease, foreign spending by other nationalities might not be the same as before or reach the level of the Chinese tourists of before the pandemic period.

A decrease of 0.3 percent in imports into Japan is not really a significant drop as it could just be related to the margin of error amount in statistical reporting and or it could just be slight increase in the Japanese yen, which helped import prices a little more which means value might have not increased that much overall.

Business investment in Japan is very important due to the fact that in the GDP there is consumer spending + business investment spending + government spending and then of course export - imports. 

As Japanese consumer spending is at times weak or not up to the potential where it should be the other variables need to kick and try to offset the less than needed consumer spending in the Japanese economy.

But it was good that demand for semiconductor devices was stronger than normal and of course research and development services which are always important for all economies.

But whether good or bad, the increase of software bought by companies due to a supposed labor shortage could be seen as maybe companies just can't find the labor needed for their companies and or they aren't willing to increase their costs as needed to bring the needed people for their companies.

Housing investments in any economy is a major variable and in the US right now it has been suggested that housing investments are decreasing due to the fact that young families just can't afford to buy a new home which means less growth for the US economy in the future.

And the same thing is happening in South Korea too as young families just can't afford new homes and apartment rentals have been increasing significantly the last few years.

Nominal GDP is not really that important except to see the increase in inflation as nominal GDP include economic growth plus inflation which real GDP growth is just economic growth without inflation, which is more reliable metric to look at.

But an increase of 0.6 percent for the July-September period is really not that much of an increase but if you look at inflation alone it has been suggested inflation is around the 3 percent level which is still above the Bank of Japan's target of 2 percent, which is considered a manageable level for most economies.

Have a nice day!

Japan Household Spending Decreases in Oct. Updated Dec. 16, 2025.

Japan household spending in Oct. falls 3.0%, down for 1st time in 6 monthsc

Article source: https://mainichi.jp/english/articles/20251205/p2g/00m/0bu/012000c

Ideas

Inflation in Japan has been a constant since the pandemic and it doesn't look like its going away anytime soon. Its not a surprise that car sales have decreased and food purchases are sluggish as Japanese consumers cut back and only buy the necessities.

Of course this doesn't look good for the Japanese economy as consumer spending, which its been suggested is 50 percent of Japan's GDP is not going to be enough to help the economy grow.

The spending of two or more people in households is just the average amount as most likely there are many more households above the average and many more below the average. But in reality, besides the 1% in Japan, there might not that many more above the average as Japan, once a somewhat rich country as not kept up with other advanced nations as is most likely well below the average for an advanced country.

For example wages or salaries in Japan are no where near the average level for advanced countries as salaries are way below the average which means salaries haven't really kept up with inflation as disposable income in Japan is not that much these days.

It seems deflation, which has been a major challenge in Japan for a very long time, is still evident with consumers either cutting back and or looking for cheaper products to buy these days.

An economy is very complex with some parts of it always doing very good and some parts of it not doing so good. Inflation or prices have a way of evening things out in an economy with some products and services doing better and then of course some products or services not doing as good as it depends a lot of on the needs and resources available to consumers.

Unfortunately as prices of food continue to increase consumers look for substitutes for what they normally buy with maybe some of the new food they buy being not as healthy as their original choices.

Unfortunately the lower-income and the fixed income groups use a lot more of their income on food purchases as that 30 percent for the average family could be much more in total value or volume for the lower-income and fixed income groups in Japan.

Again, as inflation continues in Japan consumers are cutting back on everything including housing repairs and housing maintenance Japanese households are most likely delaying repairs and trying to delay maintenance on their homes or apartments.

As Japan is an ageing society with its population getting older by the year, medical costs and medical services keep increasing as more senior citizens visit clinics and hospitals, and with the flu season now in full-force more citizens of all ages are visiting clinics and hospitals.

Private consumption or consumer spending might be half of Japan's GDP but that doesn't mean its good enough to help the economy as its much lower than consumer spending in the US or maybe even the EU.

Japanese consumers, for the most part, are more known as savers compared to US consumers who are more known as spenders and less as savers. If consumer spending on the Japan were to increase to 55 or even 50 percent of GDP that might be a significant improvement to help the Japanese economy grow.

But, to be fair, Japan has several disadvantages to improve its consumer spending situation. For one its ageing population is getting older by the year and older populations tend to spend less. And there is the immigration situation, which could potentially help with the consumer spending situation but at the present time Japan doesn't seem to want more immigrants into its country which could significantly help with spending.

Have a nice day!

Japan Economy Recovering: Updated Dec. 2, 2025.

Japan says economy recovering moderately, warns of US tariff impact

Article source:  https://mainichi.jp/english/articles/20251126/p2g/00m/0bu/031000c

Ideas

No offense, but most governments use the phrase "recovering moderately," as a way to not upset the financial markets which can easily be swayed in both directions.

And yes, at the same time the US tariff situation might be weighing heavily on the Japanese car sector which might see the profit margins reduced significantly.

Private consumption or consumer spending might be picking up some but to be fair Japan has never been a major consumer spending economy like the US as the Japanese have been more savers than spenders, which while a positive can also be a negative if the Japanese households don't spend enough to support the economy.

At the same time, capital investments are very important for the Japanese economy as most likely the capital investments are coming from Japanese manufacturing companies which might still be considered as economic drivers for the Japanese economy.

Exports might be considered flat but that doesn't mean that they are in negative territory,  although it might be decreasing from a positive zone to a slow growth zone but still stable.

The US governments current trade policy might be affecting many countries and might be affecting it allies even more as its a very conflicting situation at this time.

The Japanese economy never seems to grow that much as its a very mature economy now, which means mature economies either need a lot of resources to grow, significant innovation, or improved productivity within its economy.

Exports have been a positive for the Japanese economy for the past 50 years and might be considered its sole economic driver outside of manufacturing. 

Unfortunately, there doesn't seem to be any other sectors that can significantly help the economy grow other than exports and again maybe manufacturing in Japan.

There is the possibility of foreign tourists and the record numbers entering Japan and spending a significant amount as the weak Japanese yen gives foreign tourists more purchasing power, but at this time its good but still not enough to help  GDP growth that much, but it is improving.

Japanese companies, more than US companies, at least before the pandemic always absorbed their costs as a way to keep as many customers happy as they can and to show good will to their customer base.

But that might be changing in the future as Japanese automakers have significant shareholders who might be more demanding and want to see a significant profit, and if the Japanese car companies keep reducing prices and or keep covering the tariff costs the profit margins of the car companies are going to be reduced significantly.

At the same time, Japanese companies in the US and maybe globally have always considered market share more important than long-term profitability, but again, that might be changing soon as shareholders want to see more profit than market share from their companies.

Its possible that most of the eight Japanese car companies have significant reserves which they can use to help them over-come the tariff situation. And its quite possible as the tariff rate was reduced to 15 percent that might be enough to help most Japanese car companies remain profitable and be able to meet their shareholder expectations during then next quarter.

But the one Japanese car company that might still struggle unfortunately is Nissan which seems to be in the middle of a restructuring period and they might not see a profit over the next year or two.

Yes, again, private consumption or consumer spending might be picking up but its never going to be as robust as US consumers spending is. For example consumer spending in the US is maybe 60 or 70 percent of the US GDP, while in Japan its around 50 percent which might not be enough to help with significant GDP growth which is what the Japanese economy needs at this time.

Business investment, again, might be related to Japanese manufacturing as manufacturing in Japan is still a major sector a major industry, while in other advanced economies the services sector and the technology sector have transformed most economies but in Japan manufacturing is still has a significant presence in the economy.

Imports being downgraded to "almost flat" might mean demand for products from other Asian countries such as China and South Korea might lagging now as maybe for example the smartphones coming out of China, which might have been popular at one time, are not so popular now and the Samsung smartphones coming out of South Korea too might be losing their luster in the highly competitive Japanese domestic market.

There is also the complicated political situation between China and Japan now which might he affecting demand for Chinese products in Japan as maybe Japanese consumers might be less interested in Chinese products at this time, in China many Chinese consumers too might be less interested in Japanese product now.

Producer prices are often increasing but in the past, at least before the pandemic, producers tried to absorb their costs as a way to maintain their customer base. But those days seem a long time ago as now producers are passing-on their costs to the next in the supply chain, and maybe even the final retail customers as their profits margins continue get thinner and thinner as raw material costs continue to increase.

Japanese rice is a different story as the summer of 2024 so-called shortage has kept rice prices at all time high with many super markets continuing to have frequent shortage of rice in Japan.

Rice is a major food staple of the Japanese households and it's strange that the powers-to-be allowed rice prices to become a major challenge for households, restaurants, and supermarkets in Japan.

Have a nice day!

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!

Japan April-June GDP: Updated September 11, 2024.

 

Japan's April-June GDP growth revised down to annualized real 2.9%

Article Source:  https://mainichi.jp/english/articles/20240909/p2g/00m/0bu/010000c

Ideas:

There are always going to be revisions as new data comes to light, so going from 3.1 to 2.9 is not that much of a real different in what happened in the Japanese economy.

An annualized growth means if the economy stayed the same it would grow that much, but economies, especially the Japanese economy, is never the same from quarter to quarter.

Private consumption or consumer spending is never where is should be in Japan, as the average Japanese household just doesn't spend like the US household or maybe even the EU household.

Capital spending by companies is often based on what they feel about the future of the economy, and most likely the average Japanese company might be a little weary about the future of the Japanese economy.

GDP, especially Japan's GDP is never where it should be and hasn't been there for a very long. Most advanced economies don't grow that much, except for the US economy, as even a 0.7 percent or even 0.8 percent, while low, is about the norm these days for the Japanese economy.

Even capital investment, at 0.9 or 0.8 percent is still low, but the norm for the Japanese economy, as it seems it just doesn't grow that much.

Japan has the 4th largest economy in the world, so even at 0.7 or 0.8 its still growing but of course at a much lower rate. 

Private consumption or consumer spending is never where it should be in Japan, as Japanese consumers just aren't the big spenders like US consumers.

Japanese consumers, due to inflation, the hot weather, or other factors, are cutting back or just waiting for the summer heat to change and they will get back outside and go to different places.

The Japanese economy might be recovering at a moderate pace, but, as usual,  the Bank of Japan uses the same phrase over and over to describe the Japanese economy.

The Bank of Japan, most likely, is not going to increase its key rate anytime, but it might do it in late October or early November, as it wants to see how the Japanese economy is continuing to improve and if the financial markets are stable, after some rocky times during early August.

Yes, the Japanese economy might be recovering moderately, but that is about as positive and the Bank of Japan or others might say, as there is much chance or a sudden shift or explosion of growth in the economy.

Sluggish spending, during the current summer months, might be due to the extreme heat in Japan at this time, as anytime the temperature gets above 35 C consumers refrain from spending, as it just too hot to go out and do things.

And yes, as its the typhoon season in Japan, it might delay or cause some families to refrain from traveling in Japan. And then add in the government advisory about the potential earthquake situation, more travelers might have changed plans about traveling.

Yes, growth in real wages, due to the wage increases in April might help some with consumer spending, but so far, there hasn't been a big surge in spending, as again, the summer heat and the typhoon season, might be limiting some consumer spending in Japan.

Exports in Japan is a major economic driver, as even though services are the biggest part of the Japanese economy, Japanese exports are still a key economic driver, which increases economic growth.

The Japanese car scandal related to testing irregularities seems to have passed as the Japanese auto industry seems to be back on track to help grow the Japanese economy.

Nominal GDP is really not that important as real GDP is really what drives and economy, as nominal is just but GDP and inflation.

And the same with nominal GDP, as it includes inflation, as inflation continues to be a major factor in the Japanese economy since the pandemic.

Finally, the Japanese economy, while a very stable in economy, just doesn't grow that much, but that just might be the nature of advanced economies globally as they don't grow that much, as even a 0.8 or 0.9 that might be all the Japanese economy is going to do for a while, until maybe there is a major paradigm shift in economic growth. 

Have a nice day! 

Japan GDP Growth Outlook: Updated July 26, 2024.

 

Japan gov't cuts GDP growth outlook to 0.9% from 1.3% in FY 2024

Article Source:  https://mainichi.jp/english/articles/20240719/p2g/00m/0bu/030000c

Ideas:

There is nothing new related to the Japanese economy as 0.9 percent economic growth is about what the economy has done in recent years.

Private consumption or consumer spending has always been weak in Japan as Japanese consumers just don't spend like US consumers. And add in the continued inflation situation and it gets worse and add in the weak Japanese yen, with imports continuing to be high.

Consumer spending, as indicated might be 50 percent of GDP but the numbers don't show it as Japanese consumers don't seem to spend that much recently.

The Japanese auto industry situation might not be that bad as demand for Japanese cars in the US remains strong.

Economies always go through ups and downs and Japan is no different, but, recently, there seems to be more downs than ups. At the same time, an economy is very complex, as there are many sectors or industries in an economy, and they usually are not all positive at the same time, as some might show growth and some might show negative growth, while some might show no growth and just stagnant.

Domestic demand is always a challenge in the Japanese economy, as Japanese consumers, have been hit hard, recently, with increased inflation, which cuts into their extra income to be used in the Japanese economy.

Japanese auto production, even though there might be a controversy with improper data, US demand for Japanese cars is still very strong and most likely will remain strong through 2024.

To be fair, how can wage growth keep up with inflation and for the most part a 5% percent wage increase is good, but can't compete with inflation that increases almost every month in Japan.

Yes, a 5% wage increase is for every month, but add in inflation that keeps increasing every month, as the extra income from the wage increase is not that much or even disappears over time.

The weak yen makes is both a positive and negative for the Japanese economy, as it helps Japanese exporters get extra profits but it hurts Japanese importers, as imports prices are inflation, due to the weak Japanese yen.

The Japanese government can't do much but they can use price controls, as needed on some basic items to help Japanese households, by maybe putting a freeze on prices on some items in the Japanese economy. The price freeze doesn't need to be permanent, just a short-term freeze until inflation is under control and or the weak Japanese yen, gets a little stronger.

All of the above ideas related to energy subsidies are good and needed, but what about the basics related to food, and maybe there should be a freeze on prices related to food.

A government can't do everything, but like in the Northern European countries, they seem to have been able to meet the needs of most of their citizens. Japan maybe should be more like the Northern European countries and less like the US.

The Japanese yen situation is very complicated as a weak yen helps some in the Japanese economy but hurts some in the Japanese economy. The Bank of Japan has to manage both sides of the economy, as much as possible, to try and find a mid point that contributes to both sides of the economy.

Deflation might have been good for some in the Japanese economy, but not so good for some in the economy, as profits might have been too stagnant for too long.

And of course, for a very long time, it seemed like wage increases were not much, if even at all, might have been a challenge for Japanese households and spending in the Japanese economy, as there was very little or no extra income to use in the economy.

Forecasts are always needed and important, but rarely are they correct, due to many variables interacting at the same time in an economy. So if its 2.5 or 2.8, whichever, it might be good or it might be not so good.

But if its 2.8, for consumer price increases that means Japanese households have to deal with increased inflation, again, through 2024, and again, less extra income available to be used in the Japanese economy.

Nominal GDP is not the same as the real GDP, which should be the real target as nominal also includes inflation in the economy. 

The real GDP is what affects households more than nominal and it shows the real amount of economic activity in an economy, without inflation included.

Of course nominal shows how much inflation might be affecting households and so on, but the real GDP is what matter for Japanese households.

Have a nice day and be safe!

Japan Economy Passed by Germany: Update May 30, 2024.

 

Japan eclipsed by Germany as No. 3 economy in 2023, enters recession

Article Source:  https://mainichi.jp/english/articles/20240215/p2g/00m/0bu/013000c

Ideas:

It highly unlikely that many Japanese citizens, if only at all, really care  the country is No. 3. or No. 4. 

They are more concerned with their daily and how they are going to pay the bills. Yes, GDP can be seen as important, and or course the higher the GDP usually the better off a country is, but these days, many Japanese workers wages/salaries are much less than many or most OECD countries.

Of course Germany too is in a recession or a near recession, so they too are not doing too good, at the moment.

Even if the Japanese economy shrank 0.1 percent from the previous quarter, that is still within the margin of error, most likely, really is not that significant overall.

But Japan is always, recently in and out of technical recessions and again, maybe most Japanese citizens don't really know they are/were in a technical recession, and maybe they are only thinking about prices and paying their bills.

Usually, in other economies and central banks, they might think about increasing the key rate as a way to lower inflation and or increase the rate if in a recession, but the Bank of Japan seems to have their own way of thinking, and maybe rightly so.

Why is the idea of negative growth in the Japanese economy a surprise as economic growth has not been too good the last 30 years. So to predict a 1.28 percent expansion might have been too soon to be completely positive, just yet, even though wages are going to increase in April.

Domestic demand too, for the most part, has never been a strong economic driver for the Japanese economy, as there might be many reasons for consumer spending and consumer demand in the Japanese economy never reaches its potential like in the US or the EU.

It goes all the way back to the early 2000's and the Toyota situation and not giving wage increases to their employees and then all the other companies followed their example.

Yes, the euphoria of the pandemic ending most likely faded a long time ago, as most Japanese households settled into their normal post-pandemic lives, which of course included living with inflation and higher energy and household costs.

And again consumer spending by Japanese consumers was/is never like US consumers who tend to, or use to, spend like crazy, while Japanese consumer were always more cautious about their spending.

Whether good or bad, an economy needs some extravagant spenders and not just cautious spenders, but Japan, maybe the Japanese character, as too many cautious spenders.

Capital spending is usually never a monthly situation and most of the time it might be just in April at the beginning of the new year.

Companies sometimes, for public relation purposes, will talk about big plans as way to impress stockholders to get then to invest in the company, with no real plans for capital investments.

Structural reforms are very much a company to company situation and many companies are reluctant to invest in whatever is needed for structural reforms.

Wage increases are good and needed, but all companies, large, midsize, and small companies need to increase wages, or otherwise the Japanese economy will be an economy of haves and have nots.

You ask the average Japanese citizen what all these numbers mean and most will say they have no idea, as they are only concerned with paying their bills, getting their paycheck and living their lives as is.

Japanese exports are still an important economic driver, meaning they contribute to economic growth significantly.

The same can be said for foreign tourism, as a lot or foreign tourists now to go Japan and spend a lot due to the weak Japanese yen, which gives tourists more purchasing power.

So the Bank of Japan needs to be careful about the yen as it being weak brings more foreign tourists to Japan, but if the Bank of Japan increases the key rate too much, it might cause the weak yen to get stronger which could cause some foreign tourists from going to Japan.

Have a nice day and be safe!

Japan GDP Estimate: Updated Feb. 28, 2024.

 

Japan eyes FY 2024 nominal GDP above 600 trillion yen, faster income growth

Article Source:https://mainichi.jp/english/articles/20231221/p2g/00m/0bu/024000c

Ideas:

Nominal gross domestic product is GDP plus inflation and as inflation continues to be a challenge for the Japanese economy not a surprise that the GDP had increased.

Inflation might decrease to 2.5 from 3.0 but it might still be too high for most Japanese households and especially low-income groups.

Income growth might be increasing but it is enough, again, to offset the continued inflation in Japan. And will expected wage increases in April 2024, will they be high enough for working people to finally escape the inflation in Japan.

The problem is, many workers in Japan don't work for large companies and for the most part only large companies gave wage increases in April of 2024.

In other articles, it mentions that Japan has slipped to the 4th largest economy, with Germany now third, as maybe its continued inflation has dragged the economy down.

A 70,000 yen handout to low-income families is a good idea but how much can it last and of course there is always the talk of too much debt for the Japanese government.

And a 40,000 yen tax cut too is good but how far can 40,000 yen take a family, with continued inflation in Japan.

The key to escape inflation is wage increases and also demand-led price increases which means consumer demand and consumer spending is increasing and not companies passing-on their material costs to the next in the supply chain, including the final customer.

The Bank of Japan is always going to strike a cautious tone about the economy, as they don't want to cause any harm to the financial or stock markets.

The Japanese economy is, for the most part, a very stable economy, but at the same time doesn't grow that much, and so a contraction in the July-September quarter was no surprise.

At the same time a contraction doesn't mean all economic activity had ceased as there are always pockets of good growth and pockets of less than good growth.

Sluggish demand, too, is no surprise as the Japanese economy is always challenged related to consumer spending and consumer demand.

Also the summer of 2023 was a record for temperatures, which lasted well into late September which means Japanese consumers might have delated buying any late fall or winter clothing.

Capital spending is always cyclical meaning its never every month or even every quarter as companies decide when to spend or wait depending on the current and projected economic situation.

"Abenomics, while needed back a few years ago, might need a new strategy or approach to get the Japanese economy out of its stagnation and deflation situation.

Most might say, there have been many left behind in the Abenomics period as economic growth was seen by all or many in the Japanese economy.

Large companies might have seen the benefits of Abenomics but what about the rest of society and the overall Japanese economy?

The Bank of Japan is going to be very cautious on what is does in the future. There might be some expectations that the Bank of Japan is going to change is ultra-low policy, but any changes at the beginning will be very small and might not even be noticeable among most in society.

Have a nice day and be safe!

Japanese Company Capital Spending: Updated Feb. 10, 2024.

 

Japan firms step up spending by 3.4% in July-Sept., growth slows

Article Source: https://mainichi.jp/english/articles/20231201/p2g/00m/0bu/020000c

Article:

TOKYO (Kyodo) -- Capital spending by Japanese companies from July to September increased 3.4 percent from a year earlier for the 10th straight quarter of gain, but growth slowed further in a worrying sign for the economy, Finance Ministry data showed Friday.

Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled 12.41 trillion yen ($84 billion). Capital spending is a key gauge of domestic demand.

The slowing pace of increase from the 4.5 percent in April-June adds a layer of uncertainty to the outlook, despite many firms planning to ramp up spending for the current fiscal year to next March as the shocks of COVID-19 and supply disruptions ease.

Ideas:

Capital spending is never linear, meaning that it doesn't happen every week, every month, or even every quarter, as companies choose certain times a year to spend.

Just because capital spending might have slowed down doesn't mean the economy is getting worse, as companies, again, sometimes wait for a specific date or month to spend on capital investments.

And yes, there might be some companies, due to market conditions, might decide not to spend in this fiscal year, ending in March 2024, but instead wait unit April 2024 to begin their capital spending.

Article:

Transport equipment makers and chemicals firms ramped up investment to boost their output capacity, while service providers also increased spending.

Pretax profits rose 20.1 percent to 23.80 trillion yen, a record for the quarter, helped by the weaker yen, according to the ministry data.

"Companies have bullish capital spending plans (for the current fiscal year) but the actual numbers suggest they remain cautious," said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute.

Ideas:

Most companies are cautious, and if an economic or market situation is not in their favor, they might wait to spend.

However, there are some companies, despite the market conditions not being favorable, or the economy not being favorable, think its the best time to spend and then when situations become favorable they are in a better position to take advantage of the market.

Service companies, capital spending is a little tricky and or unclear as what might be capital spending might be operations spending, and for service companies the definitions can become blurred.

For example, is remolding the inside of a department store an operational expense or is it a capital expense?

Article:

"This is because of weakness in the Chinese economy and the lingering impact of parts shortages. Companies are also short on labor, which is negative when they want to boost investment and raise output," Kodama said.

The capital spending figure will be used to revise gross domestic product data for the same period, which will be released next Friday.

Japan's economy shrank by an annualized real 2.1 percent in the July-September period, marking the first contraction in three quarters, hurt by weak capital spending and private consumption.

Ideas:

The weakness with the Chinese economy, of course, is causing concerns for Japanese companies who might need to upgrade their capital situation, such as equipment investments, building investments and so, but because of the uncertainty with the Chinese economy, they might be waiting to see what is going to happen.

Japan's economy, in annualized terms, might have decreased 2.1 percent, but that is an estimation for the rest of the year, if conditions remain the same, which it never does. 

Its a one time look at the Japanese economy and the next quarter could be completely different, with improved economic growth.

Private consumption or private spending, is always a challenge as Japanese consumers don't spend like US consumers. 

Private spending might be 50% of Japan's GDP or maybe a little more at 60% but that is still lower than consumer spending in the US.

Article:

Kodama expects the GDP figure to be revised upward, though the economy still marked negative growth.

Weakening domestic demand has raised concern about the economy, which has been underpinned by catch-up demand following the removal of anti-COVID-19 curbs.

"The data shows that Japan's economy is recovering moderately," a ministry official said. "We will pay attention to the impact of a slowdown in the global economy and inflation on firms."

Ideas:

In one situation there is weak domestic demand and in another situation the Japan economy is recovering moderately, So which is it exactly, weak or recovering moderately, or a situation where its both. 

If you look at the US economy, its the bright light right now for the global economy, as economic growth is up, inflation is down to 2 percent, and jobs are being added at record numbers.

Of course that can't be said about Europe and especially Germany, which has its own domestic challenges.

And not to forget about China and its domestic challenges, which Japanese companies are heavily invested in.

Article:

Sales grew 5.0 percent to 367.74 trillion yen, up for the 10th straight quarter.

It came despite the manufacturing sector reporting its first drop in two quarters. Demand fell for personal computers and smartphones, and overall external demand also weakened amid aggressive rate hikes in major economies to fight inflation and a slowdown in China.

As automakers continued to benefit from the easing of parts shortages, the transport sector was a major winner in terms of sales and pretax profit growth.

Ideas:

Sales growth is always good, but at the same time what about operational expenses such as energy costs and raw materials costs.

Manufacturing, as had been mentioned in many article, has had periods of slowdowns due to supply chain challenges, such as the Toyota group of companies.

Demand might have decreased for personal computers and smartphones, but are these Japanese computers and Japanese smartphones or are the products from overseas being sold in Japan such as at Yodobashi Camera, a major electronics store in Japan. 

At Yodobashi Camera, they a complete floor of Apple computers and Apple I phones, which is the most popular products in Japan.

Despite the Toyota group having some challenges, it seems that Japanese automakers are headed in the right direction, with sales up in most of the eight major Japanese automakers.

Article:

Food companies that have been able to pass on increased costs to consumers also reported increased profits.

Rising prices of everyday goods, however, have dampened consumer sentiment and the government has compiled fresh inflation relief measures to ease their pain by cutting fuel costs and seeking to boost disposable income through tax cuts and cash payouts.

The ministry surveyed 32,557 companies capitalized at 10 million yen or more for the quarter, of which 22,920, or 70.4 percent, responded.

Ideas:

For many years, if not decades Japanese food companies were reluctant or even afraid to pass on their increased costs to the customer for fear of losing significant customers.

But now they have no choice as their profit margins have continued to shrink and they need to pass on their costs to stay in business.

Of course the prices of everyday good, including supermarket goods continue to increase and Japan is a resource-poor country, and has to import much of what it needs.

At at the same time consumer sentiment, or how consumers feel, continues to get worse, and its not surprising that they maybe pick and choose what they only need and not buy other products they might want.

Cutting fuel costs is good but is it enough? It might help with home energy costs and gasoline prices, but will it increase the needed disposable income for Japanese families, which might save the relief measures which might have helped instead of spending the extra disposable income in the economy. 

Have a nice day and be safe!