Japan's economy barely grows in April-June: revised data

"Abe’s plan—a mix of massive monetary easing, government spending and red-tape slashing"

What bloody red-tape slashing? There's more of it than ever!

The academic reason for the negative interest rate policy was to create a disincentive for the financial institutions to deposit with the BoJ and instead lend it out or invest it...that hasn't worked as planned....

Because there is no place to invest the money and get a positive return. Japan's population is predicted to fall by one-third by the middle of the century. With one-third fewer consumers to sell to not that far down the road, opening more shops, stores, banks, factories, or anything else is simply throwing money away.

And with Japan's exports facing tough competition from a host of fast-growing competitors, their share of the export market is on course to shrink as much as their domestic market.

The unfortunate thing is that academic theories seldom seem to work when used in real life situations.

I think I have seen at least four or five big economic pushes get swamped by world events since the bubble burst. It seem like something is always hitting the fan when Japan announces a plan to end the recession once and for all.

This is because the 'plan' is no plan at all. It's a bunch of old men with Edo period thinking, applying Showa period ideas to Hesei period problems, all the while wishing to return to the good old days of the Meiji period.

Throwing money at a problem and paving riverbeds is not a 'plan.' Nor is continuing to back companies that can no longer hold a competitive edge in the modern world economy. Buying votes from old fogeys with protectionist policies while simultaneously doing little or nothing to fix the underlying foundational weaknesses is not a plan. It's a scheme, at best.

Insanity is supposedly doing the same thing over and over and over, hoping for a better result this time. For 25 years now, Japan has been doing the same thing over and over and over, and yet keeps getting surprised at the same result.

JeffLeeSep. 08, 2016 - 05:05PM JST

0.7 percent isn't bad in this day and age for a developed country. The Eurozone managed less than half that. Canada's economy SHRANK 0.4 percent, and that's with huge level of immigration. The idea that Japan's slow growth is extraordinary is absurd. It's normal in today's globalized free-trade world.

The Titanic's sinking took two hours and forty minutes, while the Lusitania sinking took eighteen minutes.

Lucky Titanic passengers!

That's the problem with you snake oil salesmen wannabe financial advisors.

If we are going to blame Abe for this, let's just recall that we have falling energy prices, falling durable goods purchases worldwide, the Chinese slowdown, Brexit, and several other factors to consider.

We have every right to blame Abe for this, because nothing in Abenomics so far has addressed the cause of Japan's economic decline. Abe can try to "kick start" the economy all he likes, but so long as there is no gas in the tank, the economy will not run. Falling energy prices are a godsend to a country like Japan, which has no energy resources. The last thing Japan really needs is the phony cost-push inflation Abe is trying to create, and were it not for cheaper energy, Japan and the rest of the world would have fallen into recession already.

As for the other issues, they are caused by Abe's ilk in other developed countries, who seem to forget that it is ordinary people, small businesses, and private companies which are the backbone of their economies, and not the state, and so long as the state continues to try to power the economy by consuming ever more private sector assets, their economies simply cannot grow.

So far everything Abe has done is the opposite of what is needed. Japan's main problems are an uncompetitive economy, and the high cost of living such an economy creates. The high cost of living puts downward pressure on consumption, profits, wages, and population. This is self-evident, and obvious to anyone with more than half a working brain.

Another problem is that a shrinking population and shrinking tax revenue means that government size and spending should be shrinking too. But Abe is doing the opposite, spending record amount of money even as the means to repay this spending evaporates. As the private sector and taxpayers are bled pale to finance ever greater public spending, the cost of living edges higher, compounding the problem.

Abe should have deregulated the economy entirely, opened up trade, and cut Japan Inc off taxpayer life support via stimulus spending of our money, and told them to learn how to sink or swim. But instead, rather than address Japan's problems, he is pouring money that none of us have into the economy to keep it puttering along.

Abe is just a pawn to Japan Inc, and the only thing he will do is to continue to finance Japan Inc with our money. Debts will continue to grow, the means to repay them will continue to shrink, Japan Inc will continue to flounder, until eventually the entire mess collapses on everyone's heads.

Print more money I guess. Or manipulate yen downwards. Or cancel some debt and then spend money on more meaningless infrastructure projects. I think they would be best served by giving every taxpayer a (say) 500 k windfall payment in vouchers that have to be spent by (say) June next year.

Does it make a news anymore? Every three months we have this news from last two decades.

The weak growth figures will heap pressure on the Bank of Japan for more action when it meets later this month.

Depends who you ask.

I agree with the Germans and feel that anyone who believes that printing more money or making interest rates more negative would boost growth, is a nutcase.

It's government policy changes, but not of the tried-and-failed "stimulus package" kind, that have the potential to boost growth.

But promises to cut through red tape have been slower

There you go.

But promises to cut through red tape have been slower, and Abe’s plan to buoy Japan’s once-booming economy have looked increasingly unrealistic.

I wonder when he will finally wake up, look in the mirror, and admit his policies have failed miserably and the country is deeper in the crapper than before. Probably never, but am still optimistic!

His spend-for-growth policies have set Japan apart from some of its rich nation counterparts, including Germany, which has been reluctant to endorse them, seeing it as an ineffective way to stimulate the economy.

Reluctant? More like smart policy.

The government has "spent" 80 trillion yen in electronically created money to buy JGBs. most of that money is then deposited right back at the central bank having never actually reached the real economy. Its purpose is the drive down yields, not direct stimulus of economic activity. The academic reason for the negative interest rate policy was to create a disincentive for the financial institutions to deposit with the BoJ and instead lend it out or invest it...that hasn't worked as planned....

Growth in the world’s third-largest economy came in at 0.2 percent on-quarter, slightly better than a 0.0 percent preliminary estimate.

Hmm slightly better huh? Silver linings everywhere

So the government has spent 80 TRILLION yen per year to prop up the economy, and this is the harvest? 0.2%?

Well, I wish everyone's great-grandkids the best in trying to pay the bill for this fiasco.

I don't know how anyone who voted for Abe can look themselves in the mirror.

Oh wait a minute - he dressed yup as Super Mario. So everything's all right. Four more years!

28 trillion yen ($275 billion) package aimed at kick-starting growth

Would be better described as trying to artificially inflate an the economy which doesn't need and shouldn't grow.

As I have posted many times - why a country with falling population and which already has more than enough in terms of standard of living put so much emphasis on getting MORE? There are far more important issues and goals which should be priority.

sangetsu03 for PM!! 2017

Hey, at least it didn't shrink!

The idea that Japan's slow growth is extraordinary is absurd. It's normal in today's globalized free-trade world.

Give me a single example of any country in the world which has free trade.

To quote FDR: "...a program whose basic thesis is, not that the system of free enterprise for profit has failed in this generation, but that it has not yet been tried."

Globalization has existed since before the time of the Greeks. Were it not for the globalization you hate, you would not be able to eat bananas, have gasoline for your car, cotton for your clothes, or plastic for your toothbrush. Were in not for globalization, a country like Japan with few agricultural, and no material or energy resources would be pretty bad off, wouldn't it?

And no country has ever entirely implemented free trade. But those who have liberalized trade have been more economically successful than those who have not. Those countries which have most restrict free trade most, as a rule, are developing countries.

As an exporter, I can count on my goods not being tariffed in America, Hong Kong, or Singapore, about 20% in northern Europe, 25% in central Europe, and more than 30% in southern Europe. For goods being exported to developing counties, tariffs exceed 60%.

The funny thing is that what you believe is opposite to the truth. if you look at countries around the world, you see that the more they restrict free trade, the lower the quality of life they enjoy.

It’s not generating that growth, it's borrowing it. The 0.7% growth is a product of massive government spending, and central bank and exchange-rate stimulants

This is exactly correct. In Japan and other developed countries, public sector spending is added to GDP figures. If the money spent came from existing revenue, and could provide a positive return, then you could honestly say it was part of GDP. But if a great part of the money spent was borrowed at interest, then you can't. My business cannot borrow half a million dollars to build a new office, and call that borrowed money income, right? But that is exactly what the state is doing.

Japan's CPI today is the same as it was in 1993, meaning that the economy has not grown at all since the time. the state can fudge the numbers as it likes.

How much more failure will the citizens tolerate?

They are not tolerating it. They are not marching in the streets, and they are not voting out the LDP, but they are making their lack of toleration known by their continuing decline in consumption. They are not doing this consciously, but their lack of confidence in the state and the economy has caused them to consume less. And as things get worse, they will consume even less than they are now. This will eventually cause an economic collapse which will bring about the downfall of Abe, the LDP, the BOJ, and their brethren around the world.

Hey, at least it didn't shrink!

That's what she said! Kidding aside, it did shrink. If you subtract debt-fueled government spending, the number would be negative. And more than all of the so-called "growth" we have seen posted by the government is made up of deficit-spent stimulus corporate welfare to Japan Inc. Japan has been in continuous recession since 1995.

How much more failure will the citizens tolerate?

JeffLee.

Have you got a problem with my facts? "Financial advisor?" Huh?

Duhhh

It’s not generating that growth, it's borrowing it. The 0.7% growth is a product of massive government spending, and central bank and exchange-rate stimulants

It's quite ironic that Abe chose to dress as Mario at the closing ceremony og the Brazil Olympics because I'm very sure that Super Mario would do a better job at rebuilding Japan's economy than Abe.

Borderless trade exists among 28 member countries within the EU.

That is a poor comparison, because the countries in the EU are member states in a union. We don't use such a comparison with America's states. The EU must be considered as a unified state made up of individual states, and international trade would refer to goods and services coming from outside the EU. And, as you know, these are all tariffed. And since the EU imports a great deal in the way of finished goods from Asia, America, and other places, not to mention food and energy, a significant amount of money is spent on tariffs.

As for poor growth in the EU, it is very highly regulated, despite it's borderless composition. I have a home in southern France, and have considered going into business there. But the bureaucratic red tape which must be navigated, not to mention the the burdens to hiring workers, is just to high, and makes even Japan's bureaucracy seem simple in comparison.

@sangetsu03

"Give me a single example of any country in the world which has free trade."

Borderless trade exists among 28 member countries within the EU. No tariffs, no border inspections, etc. Goods and labor flow freely across national borders. Ever since this arrangement started, average annual GDP growth in the bloc has been 0.36 percent over the past 20 years.

Japan has just turned in a figure twice as high, annualized. Low growth in developed countries is indeed a feature of free trade.

"We don't use such a comparison with America's states,"

The US states are not sovereign countries that speak different languages, with different citizenship, and disparate cultures. etc.

The EU countries do have completely "free trade" with each other, in response to your rhetorical question, and it's the world's biggest economic bloc. And it's extensive, including such measures as financial passporting. And yet all this liberalization" has given the region secular stagnation and massive financial crises on a regular basis.

@Gary Raynor

"That's the problem with you snake oil salesmen wannabe financial advisors."

Have you got a problem with my facts? "Financial advisor?" Huh?

0.7 percent isn't bad in this day and age for a developed country.

The Eurozone managed less than half that. Canada's economy SHRANK 0.4 percent, and that's with huge level of immigration.

The idea that Japan's slow growth is extraordinary is absurd. It's normal in today's globalized free-trade world.

If we are going to blame Abe for this, let's just recall that we have falling energy prices, falling durable goods purchases worldwide, the Chinese slowdown, Brexit, and several other factors to consider.

I think I have seen at least four or five big economic pushes get swamped by world events since the bubble burst. It seem like something is always hitting the fan when Japan announces a plan to end the recession once and for all.