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Japan growth outlook wilts on poor spending, exports

By Stanley White

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The third arrow is the most difficult for Abe. Entrenched policies and special interest wont allow any foriegn investment or ability to undue ridiculous protectionism. This is the real issue in Japan; if he let in foriegners to buy up real estate or business, there would be a bubble similar to other Asian countries. This will never happen; it is still extremely difficult even for local foriegners to find an apartment or start a business. Reside in nearby countries and they are eager to rent or sell to anyone who is a legit resident, nationality non issue. The elephant in the room is taboo discussion in Japan. Perhaps a grasping at straws attempt at a nostalgic military industrial complex is the solution.

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Said it before and will say it again. Today's news is yesterday's JT comments from its readers.

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If Japanese aren't spending enough, then make immigration reform to have more number of people spending and paying taxes. Approve more visas to foreigners to work in health care industry & others that deal with seniors.

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Personally, I think Japanese Taxation needs to be overhauled. Something which should be relatively easy in this Country of supposedly high-tech ability.... basics such as basic food & clothing should not be taxed, other items can be taxed at a much higher rate.., Housing purchases should be taxed separately at a lower special rate (maybe 3-5% where it is now) in order to promote a more mobile workforce throughout the country and in order to promote both home ownership & growth. Perhaps something akin to taxation policies used in other countries. a Flat Tax rate across all purchases is not, going to promote growth.

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The govt is reaping more from Japanese companies in tax than in January, tax is taken on profit there fore it seems that Japanese companies are making more profit than in January. There is conflicting information all over the place, what you read depends on the news source and their agenda. Some only want to print the Bad news and if there is none they make it up, while others will report the actual reality or even nothing.

The Japanese business association is also telling the J govt to reduce company taxes and they will then be able to afford salary increases for the masses. Remember the reconstruction tax levied on companies after the earthquake and tsunami, business want that reduce. There could quite easily be a positive cycle as a result, less company tax higher wages more spending more tax for the govt.

What ever news source is chosen will lean one way or the other, but I choose to look for the good news.

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And, it's only gonna get worse when the sales tax hike kicks in. Japanese products will become more expensive and Japanese people will get poorer. Yeah, I've been harping doom and gloom over Abe's economic policies, but you don't have to be an economic genius to see the tunnel is closing fast!

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There will be no growth for 2014/15. The 5 trillion yen in stimulus will be squandered, and any net profit earmed by Japanese companies will be invested outside Japan. The 5 trillion will of course be considered as "growth", even though it was money borrowed at interest, and added to the one thousand trillion in debt that the government is already carrying. And like the other stimulus projects so far, the ROI will be negative.

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Abe's third arrow is like the one Steve Martin used to wear in SNL skits, with the major exception that this one is in no way funny. The house of cards is about to flop.

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The only real arrow is currency manipulation and Japan is experiencing the pluses and minuses of this policy. Growth based on exports, yes, an increasingly sluggish domestic economy with poorer consumers, yes. The real questions remain. How can consumers facing tax hikes and inflation but no wage increases possibly increase their long-term spending? Who is going to repay the colossal national debt? How do we deal with modern demographics? How do we pay for an increasing number of elderly who are living longer than ever?

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Abenomics seems to be having an effect, but not the effect that Abe wanted.

Increasing the price of imports and decreasing the price of exports means that a lot more has to be exported to pay for the imports, which are not priced in yen. The result is a larger trade deficit.

To put it another way, if I reduce my hourly wage to get more work, I will have to work more hours to pay my bill

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