Japan's economy contracts 1.6% in July-Sept quarter


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Really? So higher taxes and inflation combined with lower real wages dent people's ability to spend money? Who could possibly have guessed...

26 ( +28 / -2 )

now when they strike a TPP deal and everyone feels compelled to buy cheaper foreign products, the third arrow will have arrived.

-6 ( +3 / -9 )

Big, Fat, TOLD YOU SO!

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China's got troubles as well.

It's gonna be a rough winter. Hang on to your shorts, kids.

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I think minus 0.4% is good considering the previous quarter of minus 1.9%.

-8 ( +3 / -11 )

One thing I never understood was, why doesn't the government ever try to use patriotism to get people to support stuff? They never say, look, Japan is a great country, please love it and support things like small tax hikes, which we need in order to provide services. People have no patriotism here...or they have too much, but that's only a small group.

(In America, a certain number of people absolutely do have "one or two more children" to support America's progress, or perhaps their religious group or sect. There's awareness that America is in the best position in the world right now because its population is not crashing, like Europe and Japan)

(And I'm not defending the great waste that goes on in Japan, like "build a shinkansen to Sapporo that no one will be around to use in 40 years, because why the hell not?" Just pointing out that the government could maybe appeal to its citizens in different ways than they've done in the past.)

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Seems real strange. Analysts were forecasting 2.1 growth this quarter. I wonder how its so far off.

Abenomics works. The economy was on a steady recovery until the tax hike. The tax hike was not part of Abenomics, but instead a necessary move to balance the books.

That being said, perhaps I would have postponed the first one until 2015, or later. Jumping the gun on that was not a good move.

-4 ( +5 / -9 )

This is not good news!

@Peter Payne

One thing I never understood was, why doesn't the government ever try to use patriotism to get people to support stuff?

Isn't that the perfect example of the TAIL WAGGING THE DOG? The Japanese are rational, they don't need J-gov't using the totalitarian propaganda tactics, to make decisions about how they are governed.

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I hope people can start to realize that debt-based economies don't work. Abenomics never even had a chance of working, even if the tax hike hadn't been passed.

This is why we need decentralized economic systems like bitcoin and NEM. It's time to put control of the economy back in the hands of the people.

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Any bets on how long before the Abe administration gets on NHK and massively spins this into a positive thing?

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Yep, myself and many other people in these threads have known from the outset that Abenomics would fail and it's not only due to the increase sales tax. His growth strategies were based on markets that no longer exist for Japan, cars, electronics, etc. all of which have been taken over by other countries, mostly within Asia. Then, there is also his interpetation of 'globalisation'. By his logic it means exporting as much Jaoanese crap as possible, but it's a two-way street. Then, there is the procrastination over the TPP, which Japan desperately needs to increase spending and to make the sales tax hike mean something for the economy. The price fixing and subsidies in the agricultural industry is the reason Japan cannot climb out the hole. There is no money in Japan and printing more money has only achieved an even greater public debt. Japan's economy is doomed as long as these stoned-headed bureaucrats and their cronies run the country.

2 ( +9 / -7 )

People are still buying iPhone 6

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I wouldn't want to be born to parents who decided to have a child because it was the "patriotic" thing to do. Would you?

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Deliberate inflation targeting as a way to basically coerce consumers into spending more money will go down in history as the dumbest and most bone-headed component of Abenomics. The stupidity inherent in the idea that said "people don't spend money in a deflationary environment because they keep waiting for prices to down further, so let's cause inflation and make people think they need to spend money before prices rise too high" is obvious to anybody who's ever had to manage their own finances. And of course, all the flaws inherent in regressive consumption tax increases are known to anybody who is not a multi-millionaire.

Abe is a nationalist ideologue who only cared about economics as part of a program to revitalize Japan for the purpose of confronting China. That strategy has failed. China's leaders, already filled with feelings of enormous contempt for Japan, have good reason to view Abe as a clueless dunderhead and the Japanese voters who supported the LDP in the 2012 election as fools for believing his Abenomics nonsense.

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The next quarter figure will be really interesting. Three minuses in a row would be quite bad. Probably the yen will now be kept cheap for a while to try to avoid that happening.

0 ( +1 / -1 )

Yeah, but come on, the 2020 Tokyo Olympics will really turn these economy frowns upside down.

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Not really. Only temporary for the construction and hospitality industry. Will see a surge in new equipment and hotel reform. after its over, then what?

0 ( +3 / -3 )

The population is going down so naturally the economy should also shrink. Why this ridiculous obsession with "growth"?

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@ Peter Payne

The Japanese government actively encouraged "patriotic fertility" during World War II. In the postwar times it was consequently not such a popular idea here. Nowadays things have swung around a bit with many towns giving various perks for more than one child etc.

2 ( +3 / -1 )

Educator: "Nowadays things have swung around a bit with many towns giving various perks for more than one child etc."

Actually, what they did was cut tax-breaks that helped families with the financial burden of raising children, and instead introduced 'award systems' for those who have more children. So, a tax break that helped them raise the the child into adult years was removed, and a one time 100,000 yen 'bonus' is given for a third child, for example. It's like stealing a kid's monthly chocolate bar and then giving them two or three chocolate bars back (total, not monthly) if they promise to work hard for you. And with costs INCREASING across the board why would anyone have more kids? I'm not saying you were suggesting that. I was just adding to the point you made about things swinging around. They're not.

As for this, wasn't Abe JUST yesterday telling other nations about how great Abenomics is and how the 'third arrow', which as failed miserably, works? Did he also mention to them that his policies have failed and that's why he's going to throw a snap election while there is no viable opposition to solidify his unpopular policies? I mean, if the other nations look at what's happening in Japan and believe that things have improved or that it's an ideal model, they may as well start digging their own holes deeper.

Yeah, who'd have thought that printing more money, increasing the debt, deflating everything, and not increasing wages would have resulted in people spending less and the economy shrinking? Fools. And how exactly is his snap election that he promised would not happen going to actually help anything at all save Abe being able to say, "You see? The people agree with me! They WANT to suffer like this! It's not MY fault!"

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The tax increase was not part of abes plan for abenomics it was passed by the previous govt, .

Anyway lets see what figures look like over the next quarter,

Weakened yen, no 2% consumption tax hike we might see things in a different light.

Some of you could be too quick in your assumptions, good things take time, and a small amount of data is not the whole picture

-3 ( +4 / -7 )

The tax increase was not part of abes plan for abenomics it was passed by the previous govt

It was the LDP who forced the DPJ to write the tax increase into law under threat of voting down the previous budget. Abe was also the one who was in power at the time of the increase... if he can delay next year's increase he could have delayed the previous one as well. Blaming the tax increase on the DPJ is silly.

Also, sending the country into recession is a lot worse than 'slamming the brakes on the growth'.

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The surprise figure missed market media expectations for a 0.5% expansion, according to economists surveyed by the leading Nikkei business daily,

Maybe because those so-called economists were graduates of the Abe school of economics.

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Another glorious victory for Abenomics as the economy plunges into depression. Declining real wages, a 3% consumption tax increase, higher prices for fuel and food imports and a shrinking population combine to crush demand and lower GDP and it's all thanks to Mr Abe.

It's not much of a record on which to stand for re-election, but I'm sure the unthinking Japanese people will vote him back in regardless. After all, he is the son or grandson of a politician and that's all that matters in this country.

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The population is going down so naturally the economy should also shrink. Why this ridiculous obsession with "growth"?

If one's idea of a dream society is one where everyone lives happily in caves, then it should work out fine. But decreasing growth means decreasing tax revenues, and decreasing tax revenues (while the population ages and shrinks) means that the needy will not be getting as much support from the government as society would regard as desirable.


Some of you could be too quick in your assumptions, good things take time, and a small amount of data is not the whole picture

This was a really bad number though. I sadly have to admit I was wrong to think the economy was good enough to weather the sales tax hike. The data suggests the country is in worse shape than I imagined.

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Easy Fix: Abe should turn the regressive tax around. Drop it down to 3%

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You have to be a miracle worker to get growth in a decreasing, aging population. Seems to me Japan's only realistic chance was a properly managed immigration policy which should have tried to attract the right people from other Asian countries over the last few decades. Immigrants prop up the birth rate in the US and other places, not patriotism. Japan looks set to pay a price for its insular way of thinking.

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Japan's decline continues and one can reasonably argue that it is gaining pace.

The population decline is one thing, but the decline in the working age population is a bigger factor. There is no way the economy can grow.

Japan has had its day people.

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harvey pekar - Yeah, but come on, the 2020 Tokyo Olympics will really turn these economy frowns upside down.

Haha! The Olympics will break Japan's economy. History shows that nearly every country/city that hosted the Olympics suffered a huge economic failure after the olympics had finished. Japan is going in with an already failed economy and will not recoup the investments made in stadiums and infrastructure modifications to accommodate the Olympics. All they will achieve by hosting the Olympics is, further increasing the huge public debt.

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Yes, sorry, I was perhaps appearing to be comparing apples and oranges. When I said things have swung around a bit I was not really referring to the actual effectiveness of the efforts or to any nationwide programs. I was thinking of the local efforts, some of which have actually raised the birth rate/population in previously dying towns.

-1 ( +0 / -1 )

Easy Fix: Abe should turn the regressive tax around. Drop it down to 3%

Japan would still be broken.

Such a move would bump the budget deficit up by 5 trillion yen at least, and it's also unfair to the working people of the country, who would all of a sudden be bearing a greater share of the tax burden. The elderly in Japan are the demographic segment with the majority of financial assets, and they'd suddenly be getting even richer relatively, with their consumption taxed less.

No, the elderly should be contributing to the upkeep of the society that they live in, I think.

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Japan can increase its exports, specially to India as they themselves have asked for investments in India. It is one of the biggest emerging markets. Lots of opportunities there and Indians faith Japanese people and companies.

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@davestrousers Actually, "immigration being the answer to dropping population" that's not true for many countries; If you look carefully at the math (especially for places like Germany... which has a birth rate about the same as Japan AND it benefits from the Schengen Area where anybody in the EU can move in and live there as well, immigration is not mathematically keeping up with the declining population.

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Abe's crapnomics show its true colors today!

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Monday's data is preliminary, with a revision due Dec. 8. Since some of the decline was due to reductions in inventory, things may not be as bad as the GDP reading suggests, economists said.

Rising business orders for industrial equipment and other big ticket items should boost output in coming months, said Pierre Ellis, senior economist at Decision Economics in New York.

Abe is planning extra stimulus worth about 3 trillion yen to 4 trillion yen ($26 billion to $35 billion) that could include subsidies to low-income families and help for smaller companies squeezed by rising costs for imported energy and materials, Nishioka said.

-1 ( +0 / -1 )

People are still buying iPhone 6

People are buying it because it's a good product. (A good product whose price just jumped about 15% last weekend as Apple adjusted their price tables for the even-further-weakened yen. The cheapest iPhone is now just short of Y80,000, which not very long ago was $1000!)

A good product will sell even at a higher price, but Abe's plan is to raise the prices of everything in the country, and make sure that they never stop increasing. A big slap in the face to everyone who has diligently put their money in the bank to save for their future.

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I've been pointing out what Hampton said to everyone around me for some time, as I feel the pinch of spending more and getting less these days, all while getting paid less (income has been decreasing in the last two years). I'm sure it will surprise very few people here that the natives around me have been supportive of what is going on: "we need this, it's working." Sure, let's all ignore reality and repeat what we are being fed...

-1 ( +1 / -2 )

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