business

Japan's economy contracts, but at smaller rate than thought

13 Comments
By YURI KAGEYAMA

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Prime Minister Fumio Kishida is pushing what he calls “new capitalism.” He announced an outline of his strategy this week, aimed at jump-starting growth by pushing digitization, defense spending, start-up ventures and sustainable energy. He has also invited investments, declaring in English, “Invest in Kishida.”

No mention of wealth distribution this time with "new capitalism" ?

It has become so risible with only their proposals of corporate welfare . I guess the LDP have given up mentioning this and are just going with their QE policies (UBI for bankers) which makes them attractive for international investment.

When will the the Japanese workforce get fed up with being the tools for the global financial aspirations of the LDP gerontocracy?

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No, that’s too harsh. At least he has invested some first thoughts and presented a concept. Of course I know too, that nothing will change for better, but that’s surely not on him, because he’s got too less power and influence and the resistance in the political, economic and financial centrals is massive and overwhelming. Anyway, respect for that he started a first little test balloon.

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The world’s third-largest economy contracted at an annual rate of 0.5%, according to Cabinet Office data.

To be exact, Japans economy contracted 0.5% on an annualized basis in the first quarter, compared with preliminary data of a 1.0% decline QoQ and following a revised 4.0% growth in the fourth quarter. The gain was realized in large measure to robust growth in private consumption with real government spending and government promises of future consumer offsets and subsidities.

Things to ponder. Japanses business investment turned negative, at -0.7% versus a 0.1% rise in the fourth quarter, while public investment fell -3.9% for a fifth straight quarter.

Good news: According to the Economy Watchers' Survey, Japan's service sector sentiment increased 3.6 points from a month ago to a 5 month high of 54 in May; a third straight month of improving sentiment. The economic outlook index rose 2.2 points to 52.5, the highest in six months.

India watch. The Reserve Bank of India raised its key repo rate by 50 bps to 4.9% during its June meeting. This follows last month's off-cycle hike of 40 bps, and shocking analysts who had forseen a 40 bps rate hike. India has revised its inflation forecast to 6.7% for FY 22-23 earlier from 5.7%. RBI maintained its economic growth outlook for FY 22-23 at 7.2%, after the annual inflation rate went to 7.79% in April, the highest seen since May 2014.

Upcoming? Friday the U.S. will announce last month's inflation rate YoY. Forcasts for the core inflation rate are expecting a slight decline.

Have a good day.

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Zombie economy

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Scrivner corrections to earlier post, for "Japan's economy," and "Japanese business investment." My apology. Thank you.

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Bank of Japan Gov Haruhiko Kuroda apologized Tuesday for recently referring to a “tolerance for higher prices” among Japanese people, a comment interpreted as welcoming higher prices. Kuroda was grilled in parliament, where he told legislators his comment was inappropriate.

Kuroda has championed a policy aimed at boosting near-zero inflation to around 2%

This whole thing is bizarre.

He has been saying consistently that he wants 2% inflation. Japan (fortunately) didn’t get that until now for 9 years of madman Kuroda and Abenodisaster. So now that we get some of this inflation and Kuroda talks about it he is suddenly questioned about it?

Haro? This was the policy - taking Kuroda to task over it now seems very duh.

I have been wondering if Kuroda mightn’t resign before his term expires, but not because of his comments about the acceptance of higher prices by Japanese, which was the policy from the outset…

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The yen is falling by the day this week.

Itll soon be worthless at this rate.

-5 ( +3 / -8 )

The pathetic yen is now at 134 to the dollar and falling. Its collapse cannot be stopped now. Laughable. The "authorities' here are totally out of their depth. I feel sorry for anyone holding the worthless yen.

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i am seriously expecting social unrest to break out, even in japan. This economic mismanagement is unprecedented and frankly unbelievable even for the totally inept japanese politicians.

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Bank of Japan Gov Haruhiko Kuroda apologized Tuesday for recently referring to a “tolerance for higher prices” among Japanese people, a comment interpreted as welcoming higher prices. Kuroda was grilled in parliament, where he told legislators his comment was inappropriate.

Not to defend him, mind you, but he is merely repeating what other economists and policy makers are already suggesting in other parts of the world.

That given the right circumstances (consistent political messaging, media coverage, etc), that the populations can be ‘properly encouraged’ to accept certain long term levels of high inflation, when it is shown to them that low inflation of years gone by were aberrations and economically unhealthy by definition. The catch is deciding on a single digit percent of inflation that will not enrage the masses, while cooking up an interest rate that will make household credit affordable while not bankrupting governments paying out on bonds on higher interest rates.

Balance? I guess it is all in how you spin it. And whether the tired, underpaid and grumpy masses will buy into the narrative. Particularly when they consider how unaffordable housing is, along side their decreasing buying power, over their all-too stagnant wages. Especially afterwards when returning from the market and the gas pump.

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The pathetic yen is now at 134 to the dollar and falling. Its collapse cannot be stopped now. Laughable. The "authorities' here are totally out of their depth. I feel sorry for anyone holding the worthless yen.

It's great for my company - we have a lot of overseas business. We're making more/hour as a result when billing clients after the exchange rate, as we (usually) bill clients in their own currency. So I'm loving this. It's offset by the fact that I'm spending money in Canada, but everyone else is in Japan, so it's a net gain by far.

Go ahead and feel sorry for me, but I don't know why you would, I almost feel like Scrooge McDuck.

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i am seriously expecting social unrest to break out, even in japan.

Then you don't know the Japanese very well, They didn't even break out in social unrest when the country broke eleven years ago, with food, gas and power shortages. And they didn't break out in social unrest during WWII when their children were being sent off to die.

The Japanese are not prone to social unrest. Even when it does happen, it's extremely mild as compared to in other countries.

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The pathetic yen is now at 134 to the dollar and falling. Its collapse cannot be stopped now. 

And I still ask, "So what?". It was about 250 yen to the dollar back in 1980 when Japan's economy was booming. Logic is asking me whether we should expect another boom.

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