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5 things to know about risks and hope ahead in Japan's economy

31 Comments
By YURI KAGEYAMA

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31 Comments
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I love this use of the term' technical recession'.

Apart from the US, no other nation as far as I know, have a distinction between a technical recession and an actual recession. Two quarters of economic contraction are a recession; it's simple.

I'm not going to feel better leaving my doctor because he has told me I have technical cancer, rather than actual cancer.

3 ( +8 / -5 )

The government has been trying to encourage families to have children by promoting policies at companies and communities to make having and raising children easier, such as work leaves and day care.

What is it exactly that they have done? I have a family and I have seen Jack from the Abe regime.

A big boon to exports is the cheap yen, which lifts the value of overseas earnings. The favorable currency factor has significantly helped lift the financial results of giant exporters such as Toyota Motor Corp., adding 160 billion yen ($1.3 billion) to the automaker’s operating profit for the July-September period.

Wonderful. Meanwhile the average consumer is in massive pain over the higher prices urging less household spending.

Although critics say Abenomics has not helped the poor, Abe is credited with venturing forth with new measures, such as lowering corporate taxes, to wrest the economy out of decades of stagnation

Rob the poor to feed the corporations. A regular prince john if ever there was one.

overall it has given Japan Inc. a perk it’s not really even counting on.

but has done nothing for the people.

9 ( +11 / -2 )

It's sorta strange how trillions of yen aka QE, manage to find a way to push up the Nikkei to record highs yet never find the pocket of the ordinary Japanese person,isn't it? And how come Japan keeps finding its way back into recession whereas China has been booming? The Japanese work like dogs and continue to get poorer by the day.

If the Japanese economy cannot revive with oil at almost 40 US a barrel what is going to happen when it starts moving up and interest rates in the US begin to turn?

With a population in decline, clueless politicians and entrenched insularity, Japan is up s*** creek and sinking fast......

12 ( +13 / -1 )

More propaganda pushing the "positivity" agenda. Useless LDP.

5 ( +6 / -1 )

What hope is there realistically? Any hope is false hope.

0 ( +3 / -3 )

"the cheap yen..." has given Japan "a perk it’s not really even counting on."

As if the devaluation of the yen through QE wasn't ever expected by businesses? Does this reporter actually believe this?

3 ( +4 / -1 )

Article didn't mention

the inverted population pyramid;

Lack of equality for females;

An ossified regulatory state capitalism.
9 ( +9 / -0 )

As long as Japanese voting continue to not care of what their elected prime minister is actually doing, the situation can only get worst.

7 ( +7 / -0 )

Prime Minister Shinzo Abe is pushing his so-called “Abenomics” program, based on ... loosening old-style regulations that have discouraged new and foreign businesses.

It's not actually based on that, it was based on TALKING about that without executing, because the reflationists advising them thought the problem for Japan's economy was primarily that people's money had too much purchasing power (the "strong currency, baaaad" doctrine).

Now in typical fashion, Abe's team demand to know why businesses aren't investing through capital expenditure now that the yen has been smashed, despite no regulatory overhaul having taken place or even being on the horizon. If a weaker currency alone hasn't "fixed" the economy, why can't they see that growth opportunities need to come from somewhere else, such as the 3rd arrow?

The government heads spend too much time telling others how they should use their own money, instead of admitting their policy mix has been misguided and execution of it pathetic.

5 ( +5 / -0 )

@Gary Raynor

"Two quarters of economic contraction are a recession; it's simple."

And that view is simplistic, ignoring any adjustment for population. Japan's working age population contracted 1.5% while the economy shrank 0.8%. In other words the economy is outpacing the demographic factor in terms of growth. Canada, for example, just reported negative growth with a growing population, meaning its recession is considerably more serious.

What's more, Japan unemployment is just over 3%, way way better than the other developed countries, which can get growth by putting more people to work. Abenomics doesnt have that option because it has already successfully achieved that, maxing out its labor participation rate. Expect more negative numbers in Japan, but dont worry because they don't reflect economic health.

Indeed, GDP is an aggregate and not a qualitative metric. It measures economic size, not health. When not adjusted for population and other factors, GDP meaningless. Lots of people dont realize that, it seems.

-7 ( +2 / -9 )

What's more, Japan unemployment is just over 3%, way way better than the other developed countries, which can get growth by putting more people to work.

That's a smokescreen. Japan counts people who are working part time, interning, and even volunteering as employed. Completely different from the western countries. If we were to take the real figures it would probably be around 10 percent unemployed.

If you work 10 hours a week at 7-11 you are employed. These are not honest numbers and do not reflect the current dire situation.

4 ( +8 / -4 )

that view is simplistic, ignoring any adjustment for population.

Doesn't wash. Japan's economy has stagnated, staggering in-and-out of recession since long before the population started shrinking.

Abenomics doesnt have that option because it has already successfully achieved that, maxing out its labor participation rate.

Yes, it could be worse. The labour participation rate is a relative bright spot. The lack of slack in the labour force might lead to wage increase pressures.

But personally I'm skeptical in Japan's case, since this theory assumes that people are happy to take their labour elsewhere to get a better deal. I have a big question mark over that assumption here, with the life-time employment culture.

In any case, Japan can do better than having lots of people in crappy jobs that don't pay enough to be able to raise a family. We shouldn't be content with just a good labour participation rate.

Expect more negative numbers in Japan, but dont worry because they don't reflect economic health.

I expect that when (if) Japan's economic health gets better, the numbers will be positive as well.

0 ( +1 / -1 )

fxgaiNov. 18, 2015 - 12:41PM JST

Doesn't wash. Japan's economy has stagnated, staggering in-and-out of recession since long before the population started shrinking.

Doesn't wash and is wrong.

Jeff is referring to per capita GDP.

-1 ( +1 / -2 )

5 things to know about risks and hope ahead in Japan's economy

So let's do the math -- Of the five, two are clearly worrisome (export factor and Paris jitters), two are at best uncertain as to how they will contribute to future growth (Abenomics and the cheap yen), and only one is borderline positive (shopping). Those are not reasons to celebrate. For sure.

-1 ( +1 / -2 )

jerseyboyNov. 18, 2015 - 01:18PM JST

and only one is borderline positive (shopping).

The shopping one is pretty shaky because we had the extra 5 day long holiday in September, Silver Week, which will not come around for another 5 years.

-2 ( +1 / -3 )

Aly: Do you have some links to verify that with us?

0 ( +1 / -1 )

"If we were to take the real figures it would probably be around 10 percent unemployed."

And yet employers complain about a labor shortage, while Keidanren is calling for a huge increase in foreign workers to plug the gap. Why?

1 ( +2 / -1 )

All's I am reading is that Japan is screwed & continuing its downward trajectory..........

2 ( +2 / -0 )

GW,

Sure is, under the failed policies of the past quarter of a century, without the guts to take unpopular short-term measures for long-term gains. But I personally think at some point things will get so bad that there will be a collective realization that things need to change, Meiji style, post-WWII style.

JeffLee,

I think you have it right that there are reported labour shortages in some sectors.

In a freely functioning market-based economy, wages would be adjusted to attract the necessary supply of labour (or there would be investment in technology).

Shareholders would shutdown businesses that couldn't afford to operate profitably, with that freed up capital and labour then able to be put to productive use in new ventures.

But people want stability, and the government doesn't create incentives to encourage labour market flexibility. Immigration is one option, but there's other things the government should be doing anyway, irrespective of that.

1 ( +1 / -0 )

He doesn’t categorize Japan’s technical recession as a real recession, and expects the economy to expand in the October-December quarter.

You mean the traditional time when there's more spending by individuals and companies? I'm sure he can point to some nice retail sales data to show everything's great, everything's actually booming. This isn't a real recession, but that will be counted as a real expansion and Abe will get credit for it even as it evaporates come February.

0 ( +1 / -1 )

"And yet employers complain about a labor shortage, while Keidanren is calling for a huge increase in foreign workers to plug the gap. Why?"

How is that different from employers in the US complaining about the exact same thing, with almost twice the alleged unemployment rate as Japan? Seriously, Jeff, even you should be aware of that!

Foreign workers are not being invited here for high paying jobs. High paying jobs are increasingly hard to come by for Japanese workers. Seniors are working longer and taking jobs that used to be available for youth, while women are increasingly doing the same-making competition for (good) jobs truly frightening. And the next "must do" sales tax hike is going to put this economy into deep and real recession, no question.

Feel free to attach whatever prefix you like to the word: it's a recession. The only reason why this article called it a "technical" recession is that when you look around, things don't actually look all that bad. But if you think the economy's not contracting, or that Abenomics is succeeding, then you're wrong on both counts.

2 ( +2 / -0 )

"But if you think the economy's not contracting, or that Abenomics is succeeding, then you're wrong on both counts."

Huh? I did say the economy is contracting (slightly)....but the workforce is contracting at a faster pace. Which is why the latest data -- an aggragated output -- isn't worth getting worked up about.

As for "Abenomics succeeding," joblessness was 4.5 percent when it started. Now it's 3.5 percent. Prices have stopped falling and nominal GDP has seen a sharp rise after a plunge in the pre-Abenomics years.

I've been in truley recessionary societies, like Thatcher's Britain in the 80s, where entire towns were basicallly unemployed and public services and social order started to seriously unravel. There is no comparison to that with today's Japan, in terms of socio-economic health. No comparison at all.

0 ( +1 / -1 )

The government has been trying to encourage families to have children by promoting policies at companies and communities to make having and raising children easier, such as work leaves and day care.

Isn't it too late anyway? People who have children that I know say it's a nightmare getting daycare. How has the government promoted work-leave for men? Has it been mandated? Meh.

Prime Minister Shinzo Abe is pushing his so-called “Abenomics” program, based on stopping deflation and loosening old-style regulations

Any evidence for this yet? Or just wishful thinking?

1 ( +1 / -0 )

Hope ahead? Japan needs to get a huge sovereign national debt in order first before seeing upswing. It is almost like a constipation that is causing a pain.

-1 ( +1 / -2 )

Anyone here remember when Abenomics was so hyped? yeh.

0 ( +1 / -1 )

@globalwatcher

"Japan needs to get a huge sovereign national debt in order first before seeing upswing."

Why? Tell me how the debt is harming or holding back the economy. I want evidence, not speculation.

-1 ( +1 / -2 )

If an indicator of brighter things ahead is the propensity of the Japanese to refrain from committing suicide then the outlook is bleak.As a more than normal user of train services here I have recently noticed an upsurge in the Kansai region, people ending their lives on train tracks!Our local station, only one of many on the Kyoto-Aboshi section, has had a barrier installed.It seems that creating more 'shelf filling jobs' is not raising spirits......

0 ( +1 / -1 )

JeffLee,

Why? Tell me how the debt is harming or holding back the economy. I want evidence, not speculation.

The future risks ("speculation") are there for all to see, but as for your preferred rear-view mirror perspective, Japanese living standards are now below the OECD average.

It's hard to quantify how much (if any) of that might be because of the debt, but in any case given Japan's pathetic economic performance despite the government's out-of-control spending, and the risks that the debt poses (potential for nasty rises in interest rates when the BOJ no longer monetizes the debt, or alternatively a continued decline in the value of the currency), it's an untenable position to make out that the debt is "under control".

Besides a couple of people who comment on JapanToday, I don't know of anyone who denies this.

-1 ( +1 / -2 )

Isn't Japan on the record as having the most recessions of any country in Asia and if a recession isn't a contraction then what is......?

-1 ( +0 / -1 )

"The future risks ("speculation") are there for all to see,"

In other words, you have no actual evidence. Next.

"but as for your preferred rear-view mirror perspective,"

Interesting allegory, but a wrong one. I'm asking you to look out the *side window+ and tell me what is really there (not what you imagine will be there at some vague point in the future).

".....despite the government's out-of-control spending"

Japan's spending budget per capita is roughly half that of the UK and other advanced economies.

"Besides a couple of people who comment on JapanToday, I don't know of anyone who denies this."

I've sent you a number of links over time, articles written by people with a track record of making the right call. Here's another you will probably chose to ignore.

http://www.vox.com/2015/11/17/9749264/japan-recession-abenomics

1 ( +2 / -1 )

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