Japan GDP Growth: Updated Nov. 21, 2024.

Japan's GDP grows 0.9% in July-Sept. on solid consumption

Article Source: https://mainichi.jp/english/articles/20241115/p2g/00m/0bu/010000c

Ideas:

For Japan, an increase 0.9 percent is very good, as Japan has challenges growing very much. And even a 2.2 percent quarter growth is still good too.

Consumer spending in Japan is always as challenge as the Japanese consumer doesn't spend like the US consumer as traditionally Japan is a country of savers and not conspicuous spenders.

Of course the one-off tax cut might have along with the normal summer bonuses which might have given some Japanese consumers to splurge some.

But at the same time, not all sectors in an economy grow at the same times as capital spending was somewhat sluggish, meaning Japanese businesses might have been a little weary about the future of the economy.

And then there is exports, which can be considered an economic driver for the Japanese economy, meaning exports usually provide a lot of growth.

Again, 0.2 percent might not sound like much but for the Japanese economy, that is a lot as it is usually stuck in the stagnation range.

And the same for private consumption or consumer spending at 0.9 percent which can be considered very good for the Japanese economy.

But the challenge is, as usual, can the Japanese economy keep the same numbers in the next few quarters or will it do what is usually does meaning a little growth and then back to stagnation or no growth.

Vehicle sales are usually not an everyday purchase so more Japanese need to buy new cars to have vehicles be an economic driver of economic growth.

Most likely there are always positives and negatives, even in a situation such as the hording of rice and other products in August after the earthquake scare, as people bought a lot which might have contributed to an increase in consumer spending in Japan.

The 40,000 so-called handout in June might too have helped with consumer spending, but not to be negative, 40,000 doesn't really go that far in Japan as inflation might have taken a lot of that.

As one person has suggested in the article, without the special positive factors, most likely Japanese consumers are going to go back to their usual ways of not spending due to high prices and will spend only what is needed.

The weak Japanese yen is both a positive and negative for the Japanese economy. For the domestic economy it is mostly a negative as the weak yen drives up import prices which affect most people in Japan. 

However its also a positive for the Japanese economy too, as the weak yen brings in record numbers of foreign tourists who spend a lot on Japanese hotels, restaurants, convenience stores, departments, and tourists places.

Its also a positive for Japanese exporters who get more for the products by selling them overseas as the weak Japanese yen, increases the prices of Japanese products. 

And then add in Japanese foreign investments who get more for their investments because of the weak Japanese yen.

The April bonuses by companies might have reduced the inflation situation somewhat in June and July, but inflation is not just a once a year situation, as prices increase every month, or so it seems in Japan recently, as seen with real wages decreasing again in September.

Capital investment is usually never monthly as companies might choose different times of the year, to invest, while the murky global economy might have been enough for Japanese manufacturers to cut back on manufacturing machinery.

But it must be remembered that, at the present time, the US economy is still the strongest in the world, and demand for Japanese products is still very robust.

Exports in Japan might be considered an economic driver. Anything that is considered an economic driver is some activity that significantly increases economic growth.

And yes foreign visitors, because of the weak Japanese yen,  makes travel and shopping much easier in Japan, and because there are now record numbers each month in Japan, it easily can now be considered driver of economic growth in Japan.

Overseas-made smartphones such as those from Apple, Samsung, and maybe one of the up and coming Chinese brands are very popular in Japan at this time.

As for example, if I go to Yodobashi Camera in Yokohama, when I go to Japan, there is a large floor for I phones only and then for Mac books too on another floor. 

The Chinese economy might be going through a transition period as this time, and its going to take several years to transition back to its normal situation.

As far as the US election is concerned no one knows exactly just yet how Trumps policies will affect Japan.

Yes, its true what the article suggests as Trump's proposed policies could not only affect US consumers but also Japanese consumers and the overall Japanese economy, and of course the global economy too, not to mention the situation with China.

But hopefully, just maybe, there will be some cooler heads in Trump's cabinet or on his team who has some economic common sense, but that unfortunately might be expecting too much. 

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: Updated Feb. 14, 2024.

 

Japan's GDP revised down to 2.9% fall in July-Sept., inflation bites

Article Source: https://mainichi.jp/english/articles/20231208/p2g/00m/0bu/016000c

Article:

TOKYO (Kyodo) -- Japan's economy shrank an annualized real 2.9 percent in July-September, sharper than the previously reported 2.1 percent, hurt by weaker-than-expected private consumption and slowing growth of exports, government data showed Friday.

Real gross domestic product, adjusted for inflation, declined 0.7 percent from the previous quarter, against its earlier reading of a 0.5 percent contraction.

The world's third-largest economy marked its first negative growth in four quarters. GDP is the total value of goods and services produced in a country.

Ideas:

It seems that the idea that the Japanese economy shrank an annualized 2.9 percent appears to be somewhat misleading. Maybe it better to say the Japanese economy only grew 2.9 percent annualized which means if all conditions were exactly the same GPD growth would be 2.9 percent for the year.

A decline from the previous quarter of 0.7 percent is not that much but if annualized out for a year GDP growth would be 2.8 percent. 

Weak private consumption, or consumer spending, is always a challenge as Japan is more of a savers society and not a spender society like the US.

At the same time, of course, add in inflation and maybe some or many consumers are spending less than normal.

Article:

Private consumption, which makes up over half of GDP, dropped 0.2 percent, rather than a 0.04 percent fall, as rising prices of everyday goods dented household sentiment.

Capital investment, another key gauge of domestic demand, was revised up to a 0.4 percent decrease from its earlier reading of a 0.6 percent drop.

"While the underlying recovery trend is not yet over, both private consumption and capital spending in the GDP data were weak. Caution is warranted," said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.
Ideas:

A decrease of 0.2 percent is not that much as maybe its the range of error related to statistics.

But no doubt the increase in prices of everyday good has hurt consumer sentiment, which is consumer feeling about the economy and prices.

Economic data, statistics are always being reviewed and revised as new information is made available. Many times, in all countries data examiners always revise and change the economic data.

We need to distinguish weak from deceasing, as data that might be weak is still economic growth. But yes, caution is needed as the Japanese economy is never on solid ground or solid economic growth.

Article:

"For households, inflation is working as a negative because wage growth is more than offset by rising prices. It will take some time for (inflation-adjusted) wage growth to turn positive," Maruyama said

Weakening domestic demand poses a challenge to the government when it is seeking to ease the pain on consumers due to the double whammy of pricier everyday goods and falling wages.

The slowdown in the economy gives the Bank of Japan reason to persist with ultralow rates, but with headline inflation sitting above the central bank's long-term target of 2 percent for more than a year it is becoming increasingly difficult for the public to accept the view that the inflation goal has not yet been achieved stably through wage growth.

Ideas:

The idea for wage increases is to offset inflation but it says the wage increases in April of 2023 was not enough as inflation was higher than the wage increases.

Actually 70 percent of the Japanese workforce doesn't work for large Japanese companies, which gave most of the wage increases in 2023.

The Bank of Japan, in the past, as suggested the Japanese economy is not strong enough for EU or US style inflation strategies such as increasing the key rate.

If the Bank of Japan were to change its current policy and increase the key rate, there might be more economic stress related to the increased key rate, and some side affects which might affect some companies and consumers.

Its like taking medicine which is good for you, but there might be some unwanted did effects related to the medicine.

Article;

Exports grew 0.4 percent, slightly slower than 0.5 percent in the preliminary data, while imports increased 0.8 percent, a downward revision from 1.0 percent.

Nominal GDP was slightly revised upward to an annualized 0.05 percent fall from a 0.2 percent decline.

Robust exports had supported the economy in previous quarters despite aggressive rate hikes in major economies calling into question the sustainability of strong export growth. China's slowdown has become another source of concern.

While BOJ Governor Kazuo Ueda has underscored the need to maintain monetary easing, his remarks on Thursday that it will become all the more "challenging" from the end of the year into 2024 fueled market speculation that an exit will come sooner than expected. The yen subsequently surged relative to the U.S. dollar.

Ideas:

Exports in Japan, especially Japanese auto exports, are a major economic driver, meaning it has the potential to increase economic growth in Japan.

 Nominal GDP is just GDP and inflation together while real GDP is GDP without inflation. A slight increase means that maybe inflation had increased slightly.

Rate hikes or increases in the US has not happened for a few quarters, as the US economy is now stronger and the US Federal Reserve, the US central bank, has not seen the need to increase rates and the US economy appears strong now.

China, of course is a different situation. Ever since the pandemic, and after, the Chinese economy has been in limbo somewhat and not growing like it did before.

Of course Japanese companies that do business in China and with China, are not happy with the situation in China, which doesn't seem to change anytime soon.

The Bank of Japan since the end of the pandemic, as been under pressure to change its current low policy strategy, but other bond rates, not much as changed.

At the same time, any quick change by the Bank of Japan might disrupt the financial markets and or cause undo stress and maybe society and businesses need time to adjust to any real changes made by the Bank of Japan.

Article:

SMBC's Maruyama expects the economy to rebound in the October-December quarter but the BOJ will take a wait-and-see stance ahead of annual wage negotiations between labor unions and management next spring.

Prime Minister Fumio Kishida has pointed to the risk of Japan slipping back into deflation, or prices continuously falling, without sustained wage growth.

Later this month, the government will draw up a budget plan for the next fiscal year from April, on top of the recently-enacted 13.20 trillion yen ($92 billion) extra budget for fiscal 2023 to implement inflation-relief steps, such as subsidies to lower fuel costs and payouts of 70,000 yen to low-income households.
Ideas:

The Japanese economy might rebound in the October-December quarter, but normally, the Japanese economy doesn't grow that much.

Once again, the Bank of Japan is hooping that companies will increase wages enough for them to justify and change in policy.

Japan is always at risk of slipping back into deflation, which is decreases in overall prices for the economy. But there are positives and negatives deflation. Such as lower prices for consumers, but also negatives such as lower wage increases too.

Budget plans are good but they need to reach society or Japanese households without a lot of unneeded paperwork. If the subsidies and payouts are too hard to get, many households are going to be under more stress related to inflation.

Have a nice day and be safe!