Japan Diet Extra Budget: Updated Dec. 20, 2024.

 

Japan enacts 13.9 trillion yen extra budget for economic package

Article Source:  https://mainichi.jp/english/articles/20241217/p2g/00m/0bu/039000c

Ideas:

It seems Japan has a new economic package as its economy doesn't seem to be doing much recently, as it is up and down frequently lately.

The new economic package could be a political ploy to gain support for the current administration that doesn't has a majority the diet.

In relation to the disaster reconstruction costs, many residents in area where the earthquake hit on the west coast of Japan, say recovery is taking a long time.

And of course inflation relief, again, is just like last summer or many time before as the Japanese government just keeps coming with new inflation relief packages, without much affect on the economy.

Increasing the tax-free annual income threshold is a good idea as it will help part-time workers, who are not all college students but working women with children too.

The Liberal Democratic Party has been in power most of time Japan has been a democracy, except for a few years here or there. But now it might need all the help it can get to stay in power.

Once again while needed this economic package seems like the other economic packages aimed to do the exact thing, which helps Japanese households and hopefully stimulate consumer spending in Japan.

A one-off cash handouts for low-income households is needed but how long will it last, one month, two months etc.

As stated before Japan needs some kind of trade agreement with oil producing countries, as Japan is a resource-poor country and has to import much of what is needs including all of its energy needs.

And again, the news from the Noto Peninsula area suggest the recovery efforts are taking way too long, as its going on a year now.

It seems the Japanese government is not too concerned about its fiscal health and it just keeps spending as needed. But that is now common among many advanced countries these days.

Most of the Japanese government debt is owned by Japan, meaning its internal and not external like it was with Greece in 2010.

Like always whenever a initial government spending plan is proposed it never come out the same after all the main actors work on it. 

And this time the same too, as the initial plan was amended to make sure all will agree on the plan, such as addition of increased disaster relief funds and probably some other cuts that were not important at this time.

Free education, for everyone might new for some, but in the US 1-12 grades are free for public schools, but not for private school. In South Korea, its free for elementary schools but not 100 percent free for the other grades. 

To get that one passed it could take some doing as it might increase the budgets of local governments and the overall Japanese government too.

Have a nice day!

Japanese Govt. New Budget: Updated Feb. 27, 2024.

 

Japan to OK 112 tril. yen FY 2024 budget, shift from COVID-era aid

Article Source:  https://mainichi.jp/english/articles/20231222/p2g/00m/0bu/026000c

Ideas: 

While governments recognize the need to cut spending and reduce budgets, it rarely happens despite the their intentions, as politics and other priorities take center stage.

In this case, the Japanese economy is maybe the most debt laden economy in the world now, with no end in sight.

The Japanese government has tried to rein in its debt challenges, with a sales tax increase in 2014 and again in 2019, with both attempts resulting in decreased consumer spending, at least for the first few months.

Defense spending and social security spending maybe can't be helped as Japan wants to show its a strong defense oriented country with China nearby and because Japan is a aged society and getting older every year, it has no choice but to put a priority on social security at this time.

Its seems fiscal rehabilitation has never been a priority for the Japanese government, at least in its actions. But it does give lot of communication about reducing the debt challenge, but because of other priorities, like other governments never gets around to reducing the debt.

The cost-of-living crisis is a real economic situation that has been continuing since the pandemic started and seems like it might not end anytime soon, at least for many Japanese households.

While the Bank of Japan, keeps saying the Japanese economy has/is too weak to increase the key rate like in the US and the EU has increased the key rate, can have a lot of side effect which many more Japanese households will feel even more stress.

But at the same time, now may households and businesses might be thinking, which is worse, the situation now and or if they key rate was increased would be be better off or worse off?

Inflation in the US is finally decreasing, maybe due the key rate increase, but you can never tell exactly if the key rate increase had any real affect on the reduction in inflation.

Unfortunately, politics always has some say in what a government might do, especially if public support is decreasing.

As China continues to flex its muscles in Asia, Japan is beginning to respond with an increase in defense spending to show its military is also strong.

Japan has no choice but to address is social security costs as next to South Korea, its one of the most aged societies in the world and keeps getting worse.

At the same time, it along with South Korea has one of the lowest birthrates in the world. Increased spending on child care might help some, but its not going to solve the main problem companies helping working women with children and at the same time, the increased cost of raising children including the increased costs of education.

The 40,00 tax cut will help of course, but it is enough for the average family and a family might run through that it a month or two.

Of course, especially in Japan with it heavy debt challenge, governments can't do everything but maybe 40,000 is enough for now.

As usual, issuing bonds will increase the debt even more. But to be fair, its like households who take out emergency loans to make ends meet.

For the most part the Bank of Japan has not done much in terms of increasing it key rate other than increasing government bond yields only. 

Increased prices might have increased the consumption or sale tax revenue, but what has the Japanese government done with the extra revenue? 

A tax cut is good and needed but again, its it enough and or can the Japanese government afford to give a tax refund with it heavy debt challenge.

Have a nice day and be safe!

Japan GPD Decreases: Update Jan. 25, 2024.

 

Japan's GDP falls 2.1% in July-Sept., 1st contraction in 3 quarters

Article Source: https://mainichi.jp/english/articles/20231115/p2g/00m/0bu/003000c

Ideas:

Annualized projections are what might happen if the same amount of activity was for the entire year. It doesn't mean that it is going to be the final result, as an economy is very complex and there are quarters of good growth and periods of not so good growth.

But at the same time, as inflation continues in Japan, private consumption of consumer spending it taking a hit meaning consumers might be cutting back on how much they spend.

Weak capital investment might be related to companies feeling not so good about the Japanese economy and maybe are waiting for better situations in the Japanese economy.

Whether 0.42 or 0.5 is not that big a difference when you consider the margin of error in statistical projections. Even so, 0.5 percent is not that big of a decrease in GDP.

Private consumption or consumer spending or household spending, however you want to describe it at a decrease of 0.4 percent, again, is not that much of problem, as there could be more reasons than just increased or continued inflation of the decrease. 

For example the summer and early fall had record high temperatures in Japan. So maybe consumers waited to buy late fall or winter clothing. At the same time, because of the record heat in Japan, maybe some households or consumers didn't travel or do things as much outside.

Business investment is always a mixed bag of reasons for or against spending either in Japan or globally. It always seasonal or quarterly as business all don't spend exactly the same week or each month or each quarter.

Consumer spending " lacking dynamism" is a constant part of the Japanese economy as consumer spending, while 50% of GPD, just doesn't reach the level needed for significant economic growth.

Japanese exports are a  key economic driver in Japan, as a key driver has a significant affect on economic growth.

Of course the weak Japanese yen has increased profits as a weak currency helps Japanese exporters get more profits for their sales, such as in the US or the EU.

The Chinese situation is an on going situation, as the Chinese ban on Japanese seafood seems to be partly politically motivated. As for example there are still many Chinese tourists to go to Japan and they each a lot of Japanese seafood such sushi.

Its quite possible there was just a lull in tourists coming to Japan in the late summer or early fall because of the record high temperatures in Japan and the high of airline ticket prices have continued.

Imports actually reduce the Japan current account while exports increase the current account. Imports have to be paid for to overseas companies or wholesalers and so on.

Japan is very much a resource poor country and because of that the weak yen, makes imports more expensive in Japan, which affect GDP growth. 

Government spending was only 0.3 percent, as usually the Japanese government is a big spending government related to many things.

At the same time, as Japan is more and more an ageing society, medical care costs might continue to increase in Japan.

"Remaining on a mild recovery path, although far from being strong," is a not really a bad sign as a mild recovery is still better than nothing, but of course stronger growth is what is needed to get the Japanese economy out of its stagnation phase.

Private consumption or consumer spending has always been the weak spot in the Japanese economy. Beside inflation continuing there is also the idea that Japanese wage earners, for the most part, have not reached significant wage increases for many years, if not decades.

The there is the idea that Japan is an ageing society, and the older groups usually don't spend as much as the younger groups. But something else might be happening, and this is global too, as the current group of young wage earners are actually worse off than their parents, and just don't have the income or extra income at their parent did at the same age.

The minimum wage situation meant to help part-time or contract workers actually might make the situation worse. As maybe some companies can't afford the extra payments to workers, such as many service type companies that rely on paying minimum wage or not much more than that.

For example, as in South Korea, many companies reduced hours of part-time workers, or laid-off part time staff as their profit margins couldn't handle the extra pay required by the South Korean government. 

Again annualized GPD or growth is just a projection for what might happen if they same situation existed for a year. But rarely do the exact situation exists for a entire year and an economy is very complex and many things can happen during the year.

Have nice day and be safe!