Japanese Govt. View of Economy:

 https://mainichi.jp/english/articles/20210719/p2g/00m/0bu/047000c

Article:

TOKYO (Kyodo) -- The Japanese government on Monday maintained its view that the country's economy has seen increased weakness in some sectors in its latest monthly economic assessment, as measures to curb the spread of the coronavirus continued to weigh on consumption in July.

The economy is showing "further" weakness in some components and remains in a severe situation due to the pandemic, the Cabinet Office said, employing the same wording for the third straight month after downgrading the evaluation in May.

Ideas:

Consumer spending in the Japanese economy is not what should be, and  of course the pandemic continues to constrain the amount of consumer spending that is needed in the 3rd largest economy in the world.

That doesn't mean there is not any consumer spending, it just means its not at the level it should be.

And even in normal times, without the pandemic, consumer spending in the Japanese economy was didn't seem to reach its potential.

That means the Bank of Japan's goal of reaching 2 percent growth or an increase in inflation is a long way from becoming a reality.

Exports might be growing, but exports are only part of the economy. Most likely services now are a larger part of the Japanese economy. As some estimate the exports are no more than 20 percent of Japan's GPD.

While consumer spending might be as much as 50 percent of Japan's GPD.

Article:

The government's latest view on the overall economic situation came after Tokyo entered a fourth state of emergency over the pandemic July 12 due to a surge in COVID-19 cases following the end of the third emergency late last month.

The office retained its view on private consumption, saying it "has shown further weakness recently, especially in services spending."

A government official told reporters that the office gave up on upgrading the evaluation for consumer spending after seeing it worsen this month.

Ideas:

As some sources in Japan has mentioned to me, if you look around or go to places that might potentially have a lot of people, they are everywhere out and about doing things. But how much are they spending, for example, compared to before the pandemic.

Services spending most likely has been hurt the worst in the pandemic, as services can be anything from hotel, airlines, restaurants, or anywhere business provide things for people besides consumer products.

But you can even include retail shopping in this category, at least in stores, as people come in contact with people, while consumers might be everywhere, are they spending like they did before the pandemic.

For example, as sources have indicated, Landmark Tower in Yokohama might have a lot of people on the weekends, but how much are these consumers spending compared to before. 

Article:

"Especially, spending on entertainment-related activities picked up in late June. But this month, consumption became sluggish again as a whole, so we ended up maintaining the assessment," the official said.

With a ban on restaurants and bars serving alcohol, the virus emergency will last until Aug. 22 for the capital and the southern island prefecture of Okinawa, covering the entire period of the Tokyo Olympics from Friday through Aug. 8.

The prefectures of Chiba, Saitama and Kanagawa surrounding Tokyo as well as Osaka Prefecture are under a quasi-emergency through Aug. 22 that allows serving alcohol until 7 p.m. as long as certain COVID-19 precautions are in place.

Ideas:

Consumer spending most likely will remain sluggish or not grow much, or if any at all. 

Japan, for many reasons before the pandemic, has had challenges with consumer spending being at is potential.

But after seven years of not so good results, maybe the Bank of Japan should re-consider the idea of a 2 percent inflation rate, as not really feasible in Japan.

While other countries appear to be on the verge of increased inflation, Japan, at the moment is the exact opposite.

But that might be a good thing, for some people. If prices of regular everyday products such as eggs, milk, bread, some vegetables, meat and fish begin to rise too much during the pandemic it might begin to affect too many people, especially the fixed income elderly, and or struggling families who lost their jobs.

So the Bank of Japan maybe shouldn't be overly concerned with inflation and try more, and no doubt they are, help struggling families and businesses get through the pandemic.

Article:

By component, the office upgraded its view on corporate business sentiment, saying that it shows "movements of picking up, although some severe aspects remain." The official cited the Bank of Japan's Tankan quarterly survey released earlier this month, which indicated improved confidence among major companies.

Assessments of other major components were unchanged. The report said that exports "continue to increase moderately" and that business investment and industrial production are both "picking up."

Looking ahead, the office used the same wording as the June report, saying the economy is expected to continue picking up as the government accelerates its vaccine rollout, but warned that "full attention should be given" to the impact of the pandemic on domestic and overseas economies.

Ideas:

Improved confidence among major companies is good and needed. While all economies are made up of small, medium and large sized companies or the major companies, which have the most most revenue and sales, they should not be considered the only part of the economy that is important.

As balanced economy, lets say like Germany, where all the companies are equally important no matter they size.

And yes, in the Japan, as elsewhere, the largest companies always get the most attention.

But if you look at the entire economy and the total number of companies the larger companies in reality are jus a small part of the economy. 

The bulk of any economy, and especially the Japanese economy is the small and medium sized companies that never get in the news and never will. 

But yes, its important to know and understand what the large companies think and feel as again, sometimes they provide the bulk of investment in the economy. 

The feeling of the large companies might be improving but again, what about the mood of the small and medium sized businesses and what do they think about the future of the economy.

Most likely its the small and medium sized businesses that are having the most challenges related to the pandemic situation as they probably don't have the resources needed to overcome the pandemic or keep going during the pandemic.

Have a nice day and be safe!

Japan Exports: First Half of 2021:

 https://mainichi.jp/english/articles/20210721/p2g/00m/0bu/029000c

Article:

TOKYO (Kyodo) -- Japan's exports in the first half of 2021 rose 23.2 percent from a year earlier, marking the largest year-on-year growth in 11 years, reflecting the global economic recovery from the slump caused by the coronavirus pandemic, government data showed Wednesday.

The increase was the largest on a half-year basis since the 37.9 percent jump logged in the first half of 2010 when the world economy was rebounding from the global financial crisis, according to a preliminary report by the Finance Ministry.

Exports in the January-June period expanded to 39.86 trillion yen ($363 billion), which surpassed the pre-pandemic level of 38.25 trillion yen logged in the first half of 2019, when Japan's shipments were dented by trade conflicts between Washington and Beijing.

Ideas:

Its very good that exports have rebounded in the 3rd largest economy in the world. But it must be remembered that exports is only a part of the Japanese economy and not everything that is taking place in Japan.

Of course most likely global consumer demand for Japanese cars and other products has drastically improved and or some of it might be delayed demand, meaning many consumer might have put off or just waited because of the pandemic.'

Some of the increase might also be an improvement logistics and shipping as logistics and the container shipping sector was hit hard because of the pandemic.

Article:

The outcome is partly a reflection of a 15.4 percent plummet registered in the first half of 2020, when the pandemic disturbed economic activities across the world and dampened global demand for Japan-made items such as cars.

With strong economic recovery especially in China and the United States, Japan's exports for the six months through June were boosted by a 32.8 percent jump in car shipments as well as a 38.8 percent surge in exports of auto parts.

Imports also grew 12.2 percent from the previous year to 38.87 trillion yen, the largest gain since the 15.9 percent climb in the second half of 2017, reflecting a rebound in crude oil prices and a recovery in domestic consumption.

Ideas:

Yes, we need to always be aware, despite the huge increase in imports, its only a reflection of how far down exports plunged the first half of 2020.

Cars and car parts are a big part of the mix of exports related to Japan. As are many other products.

But something to think about. While China and the US are Japan's biggest trade partners, Japan always needs to be aware that they should always strive, as much as possible for balanced mix of trade partners.

As was seen with the trade and political conflict between the US and China, trade has the potential to be very volatile, meaning can easily go up and can easily go down. 

Yes trade with the US and China is very good, but no country, as much as possible, should depend on just a few countries for the bulk of their exports.

As much as possible a country's trade should be balanced and not just depending on the US and China only as you never know what is going to happen.

The improvement in imports and be attributed to several possible ideas, consumer demand in Japan, maybe for some foreign products has improved, an improvement in logistics and shipping, both container ships and air cargo, and changes in oil supplies which affect oil prices as oil prices are very volatile, meaning they can change quite often, which can have an affect on the overall value of imports.

Article:

Both exports and imports saw their first expansions since the latter half of 2018.

As a result, the world's third-largest economy registered a goods trade surplus of 984.99 billion yen in the six-month period, the second straight half-year period of black ink.

For June alone, Japan's exports rose 48.6 percent from a year earlier to 7.22 trillion yen, and imports were up 32.7 percent to 6.84 trillion yen. The balance marked a surplus of 383.18 billion yen, following the previous month's 189.36 billion yen deficit.

"Exports and imports sharply decreased a year ago due to the coronavirus pandemic, leading to these high growth rates for both the half-yearly and monthly figures," a ministry official told reporters.

Ideas:

Yes, its important to remember, while the increases in 2021 are very good, they are based on just how bad they were in the spring of 2020. 

At the same time, it should be remembered, the pandemic is still going on and the potential for disruptions in supply chains are still possible.

And also at the same time, improved global demand should not be taken as a given or that it automatically is going to happen. As the pandemic seems to get worse during the summer, changes in global demand might still be possible, that that it could decrease.

So while Japan is doing very good at this time, it doesn't mean, because of the continued pandemic an increase in exports is a given.

And of course, as of this writing there are always challenges with shortages of semi conductor chips for cars and the possibility of manufacturers either limiting production or even shutting down production because of the shortage, which as the potential to reduce exports and or even domestic sales.

Article:

By country, exports in the first half to China grew 27.0 percent to 8.60 trillion yen, hitting the highest level on record since comparable data became available in January-June 1979, boosted by brisk shipments of items such as semiconductor producing equipment and plastics.

Imports from the world's second-largest economy rose 14.5 percent to 9.72 trillion yen, led by strong demand for cellphones and laptops, with Japan seeing a trade deficit of 1.11 trillion yen.

In trade with the United States, exports increased 23.9 percent to 7.06 trillion yen as shipments of automobiles and car parts leaped 38.3 percent and 42.8 percent, respectively. Imports were up 7.6 percent, resulting in a surplus for Japan of 2.81 trillion yen.

Ideas:

Again its very good that exports to China and the US have rebounded nicely, but again, Japan, as much as possible should try to balance its exports so that it doesn't just rely on China and the US.

Of course China and the US, as Japan's two largest export trade partners, always get the bulk of the news related to increases exports, it should always be known, again, that sometimes trade can be very volatile, meaning there could be fluctuations due to the pandemic, now, and then also with changes in global demand and trade frictions related to political situations.

No country, or most countries want to see a trade deficit. A trade deficit usually means more money leaving the country, in the current account balance, than is coming into the country.

The US, for example is the exception, as it is mostly a trade deficit country and many of the leading manufacturers, around the world, want to sell their products in the US.

So the US always has a trade deficit. But then even that sometimes can turn into a political situation, unfortunately, because politicians don't understand global trade or they don't want to understand for their political gain.

But Japan, related to the US has always had a trade surplus, as more exports go to the US than imports from the US. 

There could be many reasons for it, but we can simply say consumer demand might be the biggest part of it.

For example, while the US might be making some quality cars, Japanese consumers just don't want to buy them. And that's OK. No country can sell everything it has in every other country. Consumer demand decides it for the most part.

Article:

"Restrictions on business activities have been eased gradually as vaccine rollouts were promoted particularly in major economies, which helped boost Japan's exports" in this year's first six months, said Masato Koike, an economist at the Dai-ichi Life Research Institute.

Looking forward, Koike said solid demand for chipmaking machines amid brisk digital investment across the world is likely to underpin Japan's exports but that the pace of recovery is expected to slow as their value has already topped pre-pandemic levels.

As for Japan's goods trade balance, meanwhile, Koike predicted that the surplus is highly likely to shrink, or that the balance may turn red, in line with an expected increase in imports.

"Imports have vast room to grow, since the nation's vaccination rate, which has been lagging behind other developed countries, will rise and boost domestic consumption," he said.

All figures were compiled on a customs-cleared basis.

Ideas:

Yes, the pace or growth of exports most likely will slow and not grow as much as they did in the first half of the year.

Part of that might be related to logistics, supply chains getting back to normal along with shipping, both air and container ships back to normal.

And then consumer demand, maybe was just waiting for an improvement in the pandemic situation, so now they have increased their demand but that also doesn't mean consumer demand will continue to improve or grow at the same pace as the first six months.

As for imports, there is always potential for growth as consumer demand in Japan tries to get back to normal.

But with the resurgence of the virus situation consumer demand might still be less than expected or needed in Japan.

As seen in the news, even with the increase in vaccinations, the number of virus cases continue to rise.

So in retrospect, the Japanese economy might be a long way off from consumer demand getting to where it should be.

Of course that is not going to make the Bank of Japan happy as it still strives for the elusive 2 percent increase in inflation.

Have a nice day and be safe!

Japan Core CPI:

 https://mainichi.jp/english/articles/20210720/p2g/00m/0bu/018000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices rose 0.2 percent in June from a year earlier as higher energy prices more than offset the impact of falling mobile phone fees, government data showed Tuesday.

Nationwide core consumer prices, excluding volatile fresh food items, gained for the second straight month following a 0.1 percent rise in May, according to the Ministry of Internal Affairs and Communications.

The core CPI, a gauge of inflation, is still far from the Bank of Japan's 2 percent inflation target, but prices gaining, albeit only slightly, will be a relief to policymakers.

Ideas:

Its interesting to keep track of prices and core consumer prices, but it looks like Japan is not experiencing any kind of real inflation at the moment. An increase of 0.2 percent is really not a major problem for consumers.

However, it might be challenge for the Bank of Japan, as it goal has been the past seven years to reach a 2.0 percent inflation rate. The 2.0 inflation rate is not just some arbitrary number it represents a sold level of demand and economic activity in an economy.

And as can be seen, prices related to many different areas or prices can be going up and down at the same time. While the global energy markets and oil supplied to Japan might be rising the government plan to lower mobile phone rates seems to be working. 

So prices in a market economy are never linear meaning all going up or all going down at the same time. Even with an increase in overall consumer demand prices are never all up or all down.

Article:

Major gainers were in the energy segment, with kerosene prices surging 21.4 percent and gasoline jumping 17.9 percent. Overall petroleum products gained 14.8 percent.

Mobile communication fees plunged 27.9 percent from a year earlier, as major operators began to offer cheaper plans for data usage in the face of mounting government pressure.

"The increase in energy prices reflecting higher crude oil prices is a major factor (behind the rise in the core CPI)," a ministry official said.

Ideas:

An increase in he energy markets can be both a positive and a negative. For the energy suppliers it might be a positive and now they can sell their supplies at a higher prices to those who need the commodities. And the thing with commodities and are not very elastic, at least to a point, meaning energy products are needed by whomever on a daily basis and even with higher prices consumers of those products will keep buying them.

But of course with families or home consumers, if the prices does get too high and or if its in the middle of a hot summer, they might cut back some on their use of their AC.

And the the operators and mobile communication fees, is it a case that maybe they could have lowered their fees at anytime have only decide to do it as maybe the Japanese government put pressure on them.

Or for example whomever the market leader was, such as Docomo always kept their prices a little high so the followers in the market did the same thing.

But now that they are lowering their prices, lets say their profit margins are now less, so they increase the prices in some other products or services to maintain their profit margins.

Article:

"It's hard to say how prices will move but we will have to closely monitor the crude oil supply situation and how it will affect prices," the official said.

The Organization of the Petroleum Exporting Countries and nonmember countries have agreed to phase out production cuts as crude oil prices have been surging.

Japan's inflation situation is in stark contrast with the United States and some European nations, where inflationary pressures are increasing in line with the reopening of their economies following COVID-19 vaccinations.

Ideas:

Usually in normal supply and demand an increase in supply or a surplus can put pressure on prices in the market as suppliers have too much supply compared to the amount of demand for that market.

But that is not always the case, as the global market may not act in the normal supply and demand scenario. As suppliers in countries might just order what they need and nothing more and or they might operate on auction system as they will barter for the best prices or even quantity they can get.

And again if oil prices were surging, in normal supply demand, above, the level of production might have been reduced, which means a possible shortage, which put pressure on suppliers to raise their prices.

Japan's economy, for whatever reason, doesn't seem to always follow the same path as the US and the EU such as inflation increasing in those countries but not in Japan.

Of course Japan has been a little behind in the vaccination situation so most likely consumer demand in Japan is not at its maximum yet, if it ever is.

Japan's inflation level, which is related to consumer demand, business demand, and increasing supplier prices hasn't reached the 1.0 percent level in many years. There could be many reasons for this as the Bank of Japan continues to tries different strategies to increase demand.

One of Abe's ideas when his idea to stimulate the economy, when he was Prime Minister was to get companies to increase the salaries of their employees so that employees would better about their salaries and then begin to spend more of it in the economy, which in turn increases overall consumer demand in the Japanese economy which in turn then might increase the overall inflation rate in the economy.

And the Bank of Japan as a further way to help the economy and to force companies to use their large deposits just sitting in banks further reduced the rates related to banks and companies as an incentive to "use your money or lose your money" over time, meaning increase the salaries of your employees.

So the negative interest rate focused on trying to get companies to use their deposits in banks and at the same allowed those who needed it to get some "easy money" and use it the economy to stimulate economic growth.

Article:

For the current business year through next March, the BOJ expects the core CPI to rise 0.6 percent from a year earlier.

"We can't find domestic factors driving the CPI higher, it's all external ones," said Toru Suehiro, a senior economist at Daiwa Securities Co.

So-called core-core consumer prices, excluding fresh food and energy items, decreased 0.2 percent in June from a year earlier for the third straight month of fall, the ministry data showed.

Ideas:

Even an increase of 0.6 is better than nothing, but until the pandemic ends CPI might not increase any more than that. Unless the economy can really open up, the demand is not going to be there.

And companies, whose supplier prices which might be rising are not going to "pass on" the increase of their costs just yet, which helps inflation, because overall demand in the economy is no where it should be yet.

So what are the external factors? Most likely the global energy or oil market as prices begin to increase and also maybe import prices increasing from global markets overseas.

Another area might be the purchasing of foreign cars might the upper middle upper groups in Japan who might be using their money to buy expensive foreign cars because they can't use it taking trips overseas at this time.

At this time, for many consumers, still, they are only buying the essential items and not buying anything more. 

But that doesn't mean everyone in the Japanese economy is only buying the daily basics. If that were to happen the economy would be in real trouble. 

Article:

Governor Haruhiko Kuroda said last week that the bank will closely monitor the impact of rising raw material costs, which vary among sectors.

"Exporters can absorb rising costs but firms relying on domestic demand, which are still struggling amid the pandemic, may not be able to," Suehiro said. "Coupled with the impact of the weak yen, the impact on the economy as a whole will be negative."

Ideas:

Yes rising supply costs might be a major challenge for many companies in Japan. Because overall demand is not where it should be yet, companies are unable to pass their supply costs on and as such their profit margins are not where they want them to be.

Normally a weak yen favors the exporters as they an get more for their exports in countries overseas.

A strong yen favors the importers and they can buy overseas products at a lower price.

So if Japanese companies needs raw materials from overseas and if the yen is weak compared to the country that they need to imports from, that increases their supply costs. and unfortunately they are unable to pass those costs onto whomever is next in the supply chain.

Have a day and be safe!

Japan Restaurant Challenges: Updated July 7, 2021.

 https://the-japan-news.com/news/article/0007581098

Ideas:

Its a very sad situation that the Japanese government can't or won't increase the subsidies as needed to help struggling restaurants. 

But maybe the feeling its not their job to help everyone in a market economy as there are always "winners and losers" in a market economy.

And of this writing, a little later than the publication of the original article, it is now estimated that upwards of 40 percent of restaurants in the Tokyo area are not following the government's suggestions to close and or not serve alcohol after 8 PM, as the article suggests restaurant owners can't survive if they follow the government suggestions.

As per the previous article that estimated upwards of 40 percent of places are now not following the suggestions of the Japanese government to close early and or not serving alcohol, there could now be even more, especially if there are no penalties for staying open later than suggested.

And as more restaurant owners begin to see other restaurants are staying open, how many more are going to do the same thing.

But another problem is even if they do begin to stay open and not follow the suggestions of the Japanese government, are there or will there be enough customers for all of the restaurants that stay open past 8 PM.

And then there is also the idea of pandemic fatigue meaning people/consumers/customers are just tired of waiting and they will begin as maybe they have already done begin to just go back to their normal or favorite restaurants or Izakaya pubs.

Its unfortunate that these companies have to close some of the places. But even in a normal market economy, without the pandemic companies are always opening and closing places based on profitability.

But the problem of course is the workers at the places that have closed. Did the companies transfer the workers to the more profitable restaurants or did they just lay them off. 

Or did they give the workers a chance to decide. Do you want to transfer to a different location or do you a lay off package etc.

And it has been reported like during the spring of 2020 some companies were actually allowing their workers and or actually lending them out to other companies to work instead of just laying them off. 

Its interesting that only Saizeriya used the strategy, in order to increase sales, increased the number of restaurants to increase sales. The idea is, if they can control their fixed expenses and even their variable expenses, which salaries are part of, the more restaurants the more potential customers the more potential sales for the company.

Again is unfortunate that the Japanese government subsidies are not enough to help as many restaurants as needed.

Now is not the time for "let the market conditions decide" the winners and losers in the market.

These are not normal market times and the Japanese government and the Bank of Japan should do as much as needed to help as many restaurants survive as possible.

I talked to several individuals who work for investment companies in Japan and they are working the best they can to help Japanese restaurants survive.

Yes, the Olympic situation was not good as probably in the past, many customers would go to restaurants, with their big wide screen TV's on and eat dinner or drink and watch some sporting events, for example which is probably what happened in the fall of 2019 during the Rugby World Cup.

As I was visiting Yokohama in both September and October of 2019, it was a different world than now. People were out and about everywhere. And there was electricity in the air that fall during the Rugby World Cup. 

But  because of the pandemic, I doubt despite the Olympics being on TV, as I watched ?NHK and other channels on my computer, that many people actually went to any restaurants or their favorite drinking places to watch the Olympics.

And yes, its always about people. But again, if possible, are these restaurant companies able to transfer some or all of the workers to other places.

And most importantly can these people find similar or other jobs during the pandemic.

As of this writing, again which a little later than the original article on Mainichi, to be fair and honest and not to criticize the Japanese government's attempts to reduce the virus situation, the restrictions in place don't seem to be working.

And at the same time, in a neighboring country near Japan, despite similar restrictions they also don't seem to be working.

So if the restrictions supposedly are not working at new virus strains appear more and more, are restaurants for example, again as mentioned, in order to survive just going to try and stay open, especially if there are no financial penalties to stay open.

Some might say like the article mentioned the subsidies are not enough and we have no choice but to stay open in order to survive.

More and more Japanese restaurants should innovate and provide either take out service and or some kind of delivery service.

For example some restaurants are probably now using Ube Eats and or maybe a cheaper service instead of having their own scooters or drives for the take out service.

Here in the neighboring country I'm in the delivery service since the pandemic as sky-rocketed with more and more restaurants using different food or general delivery companies.

And the number of consumers who now order food online has also sky-rocketed in the past year. 

Yes, any company that was able to innovate and add some kind of delivery services or for those without take out service and now able to do it have a better chance to survive and or grow.

The regular restaurants, and or the family type restaurants, such as Royal Host, Denny, etc. need to have some kind of take out or delivery service if they haven't yet.

And can the Izakaya type places find a way to innovate with some kind of take out menu including an incentive like one free drink for take out of meal and or home delivery type services. 

But unfortunately there virus situation keeps getting worse so hopefully more restaurants can survive offering more take out menus and or incentives to customers to order online and come to the restaurant as needed. And or by using some kind of delivery type service. If Uber Eats is too expensive for the restaurant and customers, they can/should find a reliable service that is cheaper.

If a restaurant large or small doesn't have an online presence they might be losing some customers and or sales because of it.

Have a nice day and be safe!

Bank Of Japan Meeting:

 https://mainichi.jp/english/articles/20210716/p2g/00m/0bu/036000c

Article:

TOKYO (Kyodo) -- The Bank of Japan said Friday it will offer zero-interest funds to help financial institutions with their own push to address climate change that could threaten economic growth and financial stability, joining other central banks increasingly committed to the global challenge.

The outline of the new funding program to be launched later this year was unveiled after a two-day policy meeting at which the BOJ, as widely expected, maintained its ultraeasy monetary policy to buttress a fragile economic recovery. It slightly trimmed its growth outlook for the Japanese economy to 3.8 percent from a 4.0 percent increase projected earlier.

The Japanese central bank stuck to its program to keep borrowing costs low for companies and households by setting short-term interest rates at minus 0.1 percent while guiding 10-year Japanese government bond yields around zero percent.

Ideas:

There are always positives and negatives related to any action the Bank of Japan takes, or any other activity in the economy. 

Climate change, as it looks now, with the present weather situation in Japan the past two weeks, is a definite clear and present danger to the Japanese economy.

Not just the past two weeks but all summer long, the affects of of the large amount of rain and of course the summer heat, has produced produced a lot of damage in Japan.

And how about the how both the heat and rain affecting the aquiculture sector in Japan?

And then add in all of the damage from the flood and mudslides you have major challenges in Japan.

But unfortunately, its somewhat like that every summer. And of course this past winter with the huge snowstorms around the west coast area and Nagano that stopped traffic on the major highways and the self defense forces had to be help all of the trucks and cars that were stuck on the highways.

Yes, the Bank of Japan should maintain it negative interest rate policy to help as many businesses and families as possible.

The pandemic, as it seems, is worse now than it was back in the spring of 2020.

If the Japanese economy does hit the projected growth of 3.8 percent, with the pandemic now out of control again, it would be good, but the pandemic might have something to say about that.

Article:

Under the new climate-related program, the BOJ will offer one-year, zero-interest funds to financial institutions for their loans and investments in such products as green bonds to tackle climate change. Rollovers will be allowed for an unlimited number of times under the scheme that will be effective until March 2031.

A growing number of central banks have become keenly aware of the need to address climate change but they differ on how far they want to get involved. The European Central Bank and the Bank of England are seeking to factor climate change considerations into policy but the U.S. Federal Reserve is perceived as having reservations, with Chair Jerome Powell saying climate policy is for elected officials.

In a calibrated move, the BOJ is underlining its commitment to addressing climate issues while seeking to remain neutral as a central bank by leaving it up to private-sector financial institutions to make decisions on climate-related loans and investments.

Ideas:

Yes, unfortunately, for some, or many, climate change is a political situation, and some think banks and related groups should not get involved.

Unfortunately with that outlook, these days, nothing might be done. Its good that the Bank of Japan has decided to try and do something.

Climate change funding is not easy as it requires many companies and industries to change how they do things. 

Just recently the EU also has come out with some new ideas related to car emissions. Of course many car companies are not happy with it because it means re-tooling their factories and or new parts in the cars which could makes the cars more expensive in the future.

So the idea is the Bank of Japan provides funding at  near zero interest rates to the banks which in turn will use the new financial resources to help companies and investors transition to new products and services that can help reduce climate change.

Article:

No specific incentives such as paying additional interest will be offered but private-sector banks will be given more exemptions from the negative interest rate applied to some of the funds they park at the BOJ.

The BOJ surprised analysts and financial markets last month when it announced a plan to launch the new fund-providing program. Riding the global momentum for decarbonization, Japan has pledged to attain carbon neutrality by 2050, with the government counting on green growth and Japanese megabanks halting financing for new coal-fired power plants.

In addition to the potential longer-term impact of climate change, the BOJ also assessed the near-term impact of the coronavirus pandemic as Tokyo, hit by resurging coronavirus cases, is under a fourth state of emergency, with further progress in COVID-19 vaccinations seen as the key to increased economic activity.

Ideas:

It looks like the Bank of Japan is following on the lead from the EU and the UK to try and get some momentum in addressing climate change challenges.

Just like what happened in the EU this summer with the major floods now no country can deny that the global climate is changing rapidly.

Japan has always been a country with major climate challenges and even more the past few winters and summers.

Of course to make changes it going to cost money for some companies or many. So the Bank of Japan realizes this so they are laying the foundation for banks to proved needed funds to help companies transition to a more carbon free environment and or any other green innovations that come along in the future that might Japan become an more green society and economy.

The elimination of coal-fired power plants will not be easy because Japan or society seems to not want nuclear powered plants. So what is the alternative. 

If the situation in 2011 had not happened perhaps Japan and the Japanese society would not have thought much about the use of nuclear power as a source of energy.

Yes, vaccinations are important, but at the same time, the virus situation is even worse than what it was in the spring of 2020. How much is the economy going to be affected is a challenge. 

Article:

The growth outlook for the Japanese economy was cut for fiscal 2021 through next March but gross domestic product is expected to increase 2.7 percent in fiscal 2022, rather than the 2.4 percent expansion projected earlier. The core consumer price index excluding volatile fresh food items, a gauge of inflation, is now forecast to rise 0.6 percent from a year earlier in fiscal 2021, instead of the earlier estimate of a 0.1 percent gain.

"Japan's economy has picked up as a trend, although it has remained in a severe situation due to the impact of COVID-19 at home and abroad," the BOJ said, maintaining its assessment.

To continue to support the economy and accelerate inflation toward its 2 percent target, the BOJ will buy exchange-traded funds, or investment products comprising a variety of stocks, as needed with its annual purchase limit set at 12 trillion yen ($109 billion).

Ideas:

If the Japanese economy does grow 2.7 percent that would be good. But it needs to be remembered how bad the economy was, so a 2.7 percent growth in reality might not be that much.

And it needs to be remembered, not all sectors grow at exactly the same rate. So there might be some sectors, such as the export sector, which is and will see excellent growth, but some parts of the services sectors, such at hospitality and tourism, might not see much growth if any at all. 

For example just this week several hotels seemed to have closed until January of next year, hoping that the virus situation might be less then and customers will begin to come back to the hotels. 

An increase of inflation from 0.1 to 0.6 might look good but its too early to say that there is an increase in real demand in the economy which can help increase inflation. Of course supplier prices are another reason inflation might be increasing some. 

An increase in inflation or prices, can sometimes indicate that overall demand in the economy is improving, but at the same time it can mean supplier prices are increasing to which can sometimes be passed on to whomever is next in the supply chain.

To to be fair and honest, for now, the Bank of Japan maybe should not concern itself with its 2 percent target, as it been trying to reach the target the past seven years without much success.

The Bank of Japan, for now and in the foreseeable future should continue to focus on helping companies and families survive the pandemic.

Article: 

Unlike in the United States and some European nations where inflationary pressures have been building up in line with the reopening of their economies, Japan appears to be an exception. The core CPI has been hovering around zero percent and the BOJ's elusive 2 percent target is still far off.

Despite economists saying such inflation overseas is likely to be temporary, rising material costs is a source of concern for Japanese companies, which are reluctant to raise prices when consumption lacks strength.

Ideas:

Yes inflation challenges appear on the horizon in the EU and the US but mostly likely its about increasing demand which might be a good thing for the respective economies.

But Japan, for whatever reason, appears to always be an exception. The Bank of Japan has tried for the past seven years to get inflation to the 2 percent level, without much success.

So that brings up an interesting question, on the issue of inflation and or any other situation, just how much influence does a central bank have on situations in an economy and can they really change them?

Rising material costs are a major challenge for any companies, but even more now, and the pandemic continues to affect supply chains. 

And yes companies are not going to raise prices if there is not enough consumer demand in the economy.

But that has been the challenge for the Japanese economy recently. While consumer spending is around 50 percent of Japan's GPD, it doesn't seem to be enough and or doesn't seem to reach its potential for an economy has large as Japans.

Perhaps consumer spending should be 60 to 65 percent in Japan instead of always staying around the 50 percent level, which is what it is in most advanced economies.

So again if the Bank of Japan wanted to try and get more consumers spending in the economy what more can or could it do, since what it has tried so far as not had much affect in reaching the 2 percent inflation goal.

Have a nice day and be safe!