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Japan's economy suffers record 27.8% contraction in April-June

31 Comments
By Leika Kihara and Tetsushi Kajimoto

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© Thomson Reuters 2020.

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31 Comments
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Thats nothing if you calculate it to European standards it's just around 9% while in Spain 18%

Just numbers, like the cases for virus doesn't mean anything.

-16 ( +3 / -19 )

Japan has deployed massive fiscal and monetary stimulus to cushion the blow from the pandemic, but....I haven't seen it nor has anyone I know ¥100,000 is hardly massive and cushion? More a token. Rent and food for a month....not massive. But I'm not an international company or friends with Abe.

15 ( +18 / -3 )

This wasnt totally unexpected, and the media would be better serving the people by not making it seem like the proverbial sky is falling.

Japan could use an even half-way decent leader right about now!

11 ( +13 / -2 )

"Never let a crisis go to waste". It is the motto that underlies corporate oligopoly and why in the aftermath the 2008 great recession Wall Street came out stronger than ever and a generation had to start off with foreclosure, debt and anemic job prospects. In this crisis we see the same with billionaire wealth ballooning.

If there is the will, it could also bring in a new era of human centered capitalism and social democracy in many advanced nations.

8 ( +11 / -3 )

Send the bill to Communist China.

The Japanese economy was ticking along nicely, with the Olympics just around the corner to boost things, before the virus was unleashed on the world from China.

This worldwide Depression is the last warning to the world to cease ALL trade and relations with Communist China.

-1 ( +13 / -14 )

Fighto!Today  09:48 am JST

Send the bill to Communist China. 

The Japanese economy was ticking along nicely, with the Olympics just around the corner to boost things, before the virus was unleashed on the world from China. 

This worldwide Depression is the last warning to the world to cease ALL trade and relations with Communist China.

Beat me to it! :-)

-8 ( +5 / -13 )

According to an NYT article, the worst has passed and Japanese banks and corporations are solvent - which overlooks the fact that 70% of the economy is companies with fewer than 100 employees, and they are suffering.

https://www.nytimes.com/2020/08/16/business/japan-economy-recession.html?action=click&module=Latest&pgtype=Homepage

5 ( +7 / -2 )

"Never let a crisis go to waste". Naomi Klein used the term "Disaster Capitalism" to describe it. We proles just call it opportunism and naked greed...

3 ( +6 / -3 )

This is easily a technical depression. The history books will have to come up with an official name for this era. Perhaps, "The Second Great Depression."

Thanks, China!

4 ( +12 / -8 )

The virus is still spreading despite high temperatures.Coming into winter will see an upsurge in cases as the virus (if present) will be able to survive for much longer periods.

There will also be more colds and a flu or two.

1 ( +4 / -3 )

@expat with the "Disaster Capitalism" reference. Exactly. "The War on Normal People" by Andrew Yang also recommended.

-2 ( +2 / -4 )

Read Chris Hedges' new book - or pretty much any of his recent work - for a compelling account of how we got where we are.

8 ( +10 / -2 )

WhatsnextToday  09:58 am JST

This pandemic is meant to bankrupt small business so a "new" system can emerge where only corporation linked to the government can exist. It's the Chinese model being implement world wide. The pandemic is the tool for the globalist to achieve this goal. They have even bragged about it in their own speeches and books. This is literal global terrorism.

Yep. They're even bragging about it, if the World Economic Forum's Great Reset is any indication. No dark conspiracy theory nonsense - it's out in the open for anyone to see if they bother looking.

1 ( +5 / -4 )

Yep, must admit readers but its true if your company is not tied to the government your not going to make it. Mine is now tied to the government no choice in order to keep folks employed. If only the government would have implemented strong measures experiencing the Chinese version of SARS1 and take lessons learned in now SARS2, we would have been ok.

2 ( +3 / -1 )

Economic contraction, no shock nor surprise, it is happening practically globally nowadays. Most countries are facing a real bad scenario, a couple of others survive a bit better.

The world has to endure such trauma for a longer time, as the obnoxious impact of Covid virus lingers on persistently everywhere. Persevere to overcome, there will always be a bright spot at the end of the dark tunnel.

0 ( +2 / -2 )

Blame it on the virus. Of course the govt is not to blame. Blame on China. Of course the govt is not to blame. Blame it on solar flares...

0 ( +4 / -4 )

what abt usd exchange bank rates i see no changes at all...strange a bit?110jpy for 1 usd tonight?

0 ( +0 / -0 )

@Larr Flint

Just numbers, like the cases for virus doesn't mean anything.

LOL! Not sure what form of metric or criteria you're using if you don't involve numbers....

6 ( +6 / -0 )

Negative 27.8% is a lot !

1 ( +2 / -1 )

@JeffLee - Totally agree. I think it will sadly, certainly lead to your conclusion, as I have stated elsewhere. @Larr Flint clearly has no understanding of economics if he can state that it is 'nothing', but maybe this is to protect his coming lockdown that he has been clamouring for!

3 ( +4 / -1 )

Can't be helped, local economy is tied up in a big way to global economy.

Just like with the Olympics, even if covid19 was contained here in Japan, Olympics still wouldn't push thru if covid19 was raging in many other countries.

2 ( +2 / -0 )

I wonder why there were no loud news before, when everyone’s money wallets contracted....lol

0 ( +0 / -0 )

Even without any pandemics, the Japanese economy shrinks if someone just sneezes in another country. What did you think is going to happen with a pandemic?

0 ( +1 / -1 )

Strategy Owned by PM Imran Khan during the last four months of COVID-19 which is under control in pakistan where as 3000 cases reported daily on 25000 test per day know the cases are under 800 cases and today 24890 test were conducted in pakistan the strategy is simple "Smart Lockdown".

Identify the clusters cities or prefectures and quarantine them for 16 days.

Allow restaurants to open for only eight hours and only home delivery service should be provided.

Open International Flights for each 15 days 3 thousand foreign to return to japan make them selves tested if they tested positive quarantine them for 14 days and make two test negative policy for mild symptoms and for asymmetric cases one covid negative test is enough.

Contact tracing is key to flatten the curve.

Low the interest rates for company.

A economic protocol should be developed for a pandemic.

Stay safe and stay home( A message from a silent friend from pakistan to it's lost friend Japan)
1 ( +2 / -1 )

Japanese better start working harder or risk becoming a poor country.

4 ( +4 / -0 )

China needs to pay up

0 ( +2 / -2 )

Too much money and effort on the Olympics and tourism.

2 ( +2 / -0 )

Money has already been spent (as has your tax) @Luddite. You want to hope that Olympics CAN take place at some point, although I doubt it will be next year. Otherwise look for your tax to go up, even more, and your pension pot (if you care in Japan) to be diminished further. Your argument is 8 years out of date sadly.

-1 ( +0 / -1 )

Hey Japanese people, put in some Ghosh damned overtime and bring those numbers up!

0 ( +0 / -0 )

Japan already suffered a huge blow due to the tax hike. The COVID-19 is hardly the true cause of Japanese economic pain. Every year, Japan seems to never escape the downward spiral. There hasn’t been any structural change since the bubble economy collapse.

GBR48 from Japan Times basically answered my whole point for a long time.

Let's have a listen!

None of these concepts can survive within political systems. And governments do not reform themselves. They consider themselves to be perfect, particularly if they have just won an election, sanctifying their perfect nature.

The reforms that the article speaks of were expected to come with Abenomics, but after gathering the booty into their coffers, Japan Inc. didn't like the idea of reform and politely declined. And very little of the 'trickle down effect', dribbled down to the ordinary people.

It is unfair to blame the stats on the sales tax rise. Hyped by the media, world+dog went out and bought everything they were going to buy for the next six months before the rise, and then didn't need to buy anything bar essentials after it. Hence, sales were cannibalised from the post-rise period creating a bump, with a trough after it. This heavily magnifies the difference in figures.

There were other options to a rise in sales tax (although it is far too low for a first world economy, and far lower than most others). But no government is going to stop sluicing cash from public funds into private pockets, directly or indirectly. All governments have done this, but the 'one party state' stability of the Japanese government, post-war, has made them experts at it. That is why the Japanese state has a huge credit card debt, and why Japan Inc. has sacks of cash. If you are staring at a big hole in the ground and a big pile of soil, it isn't difficult to work out what happened.

Abe's big idea was for the BoJ to paper over the cracks in the economy, which it has done. He also fabricated a fiscal demon - deflation - to go with the political one - Kim Jong-un.

Deflation is only a bad thing if you are lazy and want to get rich sitting on your rear by your swimming pool. It doesn't affect the ability of a well-run company to turn an honest profit, and is nothing more than an indicator. One of the things it indicated was that Japan Inc. needed reform, but Japan Inc. has only reformed twice since the start of the Edo period (in 1852 and 1945). Both came courtesy of the US government. It didn't enjoy either and it doesn't want to do it again.

To compete, the obvious requirements are to loosen up the labour market from the current, frigid model, flip to promotion according to ability (not age), embrace new concepts via start-ups and the disruptive/sharing economy, and pay fewer staff more.

But none of these are seen as 'problems' by those in charge, who can rely on 57 varieties of Communist-level state support when the balance sheet goes red. Even if they no longer turn a profit, there will always be a bail-out to be had. With so little risk, why rock the boat by adopting nasty foreign behaviour?

The rise in nationalism, putting globalisation to the sword, and the consequent collapse in global growth, intensified by Covid-19, will see Japan Inc.'s declining position relative to the RotW PLC actually improve, as the state moves to prevent damage in the way it always has. Unreformed, Japan Inc. cannot compete on global terms, but it also cannot decline quite as dramatically as the rest of the world will.

I suspect this will be an opportunity for Japan Inc. to retrench and to celebrate its inflexibility as a benefit rather than a curse.

Post-Abe, the LDP is unlikely to swing further towards economic (or any other) reform. It is more likely to take the opportunity to quietly drop Abe's less popular policies - pro-tourism, pro-China, pro-global and pro-reform. Don't expect a Japanese Trump, but do expect a reversion to an earlier model. Something a bit more Showa era. Everyone loves a bit of retro. Young and female Japanese might not enjoy it quite so much, but in a nationalist world, you either do what you are told and fit in, or suffer the consequences.

Magic Monetary Theory may be invoked, or the public debt figure can simply be allowed to rise, to fund this. [Foreign] criticism of this can simply be ignored, as the Japanese financial position is mystically 'different' and foreign economists just don't understand.

The sales tax might even be reduced to reboot the economy when the virus passes. Under Abe, Japan dipped its toe in the globalised water, more than ever before. Too much risk. Too much loss of control. Too much consequential damage. Too many tourists. The desire to return to a simpler, 'more Japanese' way will score more votes.

Is this good for Japan? Not financially, but figures can be massaged or ignored. Not in the long term, but politics is all about the short term. Japanese culture will not evolve, as all healthy cultures do, but traditional societies operate under different rules, and can freeze their cultures in a past age, regardless of the damage it does (particularly to women).

Ideally, Japan and its financial power would have become an important link in a global push to mediate against climate change. Whilst the response to the virus is actually doing that by accident, much of it will not stick when the virus passes. The new world order, based on nationalism, will have no 'global' anything, so there will be no 'global psuh' for Japan to be part. As climate change hammers the country, it will just be more of the disasters that Japan has become used to.

What a country needs, what a country wants, and what a country gets are three entirely different things.

2 ( +3 / -1 )

Print more, more and more money and use mo' helicopters to drop everywhere. Don't stop and question the walking dead.

0 ( +0 / -0 )

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