Japan's economy grows 2.4% in first quarter

itsonlyrocknroll

Hi bruinfan Real growth rate (adjusted for inflation) - Japan GDP growth (quarter-on-quarter basis) rate for first quarter of 2015 grew by 0.60%. Annualized GDP growth increased to 2.40 percent.

But in the fiscal year which ended with these figures up March 2015 , the economy actually shrank by 1% over the fiscal year.

As Disillusioned said, it's just smoke and mirrors.

Smoke and mirrors folks! If you look at all the quoted figures over the last 12 months or so you will see that, over all the economy has shrunk. These petty little ups and downs they keep mentioning are only to appease the masses who really have no idea what is going on. Retail sales have dropped. Manufacturing has dropped. Exports have dropped. Imports have increased. Smoke and mirrors!

Hi Gary, purely for the benefit of bruinfan I am explaining the figures in the article above are 'real growth' rate......

The audited data compiled in statistical publications, are below...........As a Quant, perhaps you could enlighten me on current modelling JGB futures yield to maturity....

https://www.boj.or.jp/statistics/pub/sk/data/sk4.pdf

What is of concern is the simulations of gross government debt as a share of GDP, need to move away from the cult of Abenomics and focus on a detailed and credible medium-term fiscal strategy. Social spending is rising sharply in line with population aging another area income inequality. between part time and full time contracts. There is also a hefty gap between government expenditure and revenue.

Um...I haven't experienced any growth, quite the opposite, same as all the Japanese I know. Either this is a lie, or the money is only going to a few at the top?

"You said Abenomics will work and others said it wouldn't.. they seem to be right...excuses aside."

"Right", indeed, Great call you guys on your predicted bond crisis/sovereign debt default. Such astounding insight.

Well, the policy that didn't "work" was actually the tax hike, and not the 3 arrows of Abenomics. In fact I have been anti tax hike all along, and warned beforehand that the tax hike would reverse the gains, and yep I was right. While the others (the ones who "got it right) rabbited on about all the supposed risks from the fiscal debt. Which naturally.... haven't materialized. But, oh, they're right, of course. Too funny.

Hi bruinfan Real growth rate (adjusted for inflation) - Japan GDP growth (quarter-on-quarter basis) rate for first quarter of 2015 grew by 0.60%. Annualized GDP growth increased to 2.40 percent, no apologies necessary..

Hi Gary to many assumptions,, I have spent a couple of months on secondment to the OECD dealing with risk forecast in relation to the Euro. The OECD has a comprehensive economic survey of Japan 2015..... Give it a browse when you have time sorry it is some 146 pages....

http://www.oecd.org/eco/surveys/economic-survey-japan.htm

Whenever any government resorts to fiscal tricks to fix its ailing economy, instead of its fundamental flaws which caused the ailment in the first place, it rarely pays off in the long run, and Abenomics may not turn out to be an exception.

You are more than welcome bruinfan...

Hi Gary that 2.4% is a distraction. The OECD report is a survey, an assessment if you will. The OECD has some talented statisticians but as with every forecast one has to be mindful of the unexpected.

I have invested some of my own savings into some small/medium sized business in Kochi, technology and financial software products, I have some experience in areas of employment and accounting in association with these businesses. In obtaining a skilled workforce a business cannot rely on 'good will', investment means paying salaries that reflect employee contribution.

The problems arise when a business has employees that for contractual reasons perform a similar role but receive different rates of remuneration. This is an area that restructuring employment .legislation needs to address. There are workarounds but it is not a solution. If I am not being nosy can I ask what sector of employment your in?

Let's just hope this won't be revised down in a few weeks.

Glad commentors on here can set this news straight. I almost fell for the good news as well. Guess it's better to actually do research and pay attention to the numbers rather then the news media.

Thanks all for the details.

Japan's economy grows 2.4% in first quarter

E. & O.E .

Is this real growth or nominal growth (sorry for not knowing)?

The economy shrank 6.4% in April to June last year due to the tax hike. The fact that we are now at +2.4% in less than a year is a positive sign. Most business associates I have spoken to are cautiously optimistic. My business has picked up significantly from the beginning of 2015. There is money to be made.

But in the fiscal year which ended with these figures up March 2015 , the economy actually shrank by 1% over the fiscal year.

Um, no.

Q2 (April-June): 525,479 Q3 (July-September): 522,703 Q4 (October-December): 524,161 Q1 (January-March): 527,283

Those of course are billions of chained 2005 JPY.

That would be a .35% growth. Pretty small but not a drop.

"I'm not saying Globalwatcher and Dog have been proven right, but it sure is looking that way"

Ah, you must mean Japan's sovereign debt default, the loss of confidence in its financial markets, skyrocketing interest rates, etc. Yeah, those guys were right on target. LOL.

"Posters like Jeff Lee and Nigelboy were defending the future prospects of Abenomics."

Yep, it was working...until the consumption tax hike, which was NOT Abenomics, dragged it down. That decision was made with the previous administration. None of the 3 arrows calls for higher taxes.

I do not trust the numbers released by Prime Minister Abe and his cabinet. He does not have a history of HONESTY.

He should release the details in many pages of the different numbers to the press and on government websites. The exchange rate has gone from 80 yen to a dollar to 120 yen to a dollar. "Constant" GDP in US dollars will shrink because of the depreciation of the yen. The US government is MUCH MORE TRANSPARENT in releasing details.

One quarter does not change anything. Some large companies are starting to increase wages, but smaller ones are not. Instead, wages are mostly stagnant and, adjusted for inflation, have been consistently falling for the past two years. Companies are increasingly hiring contract or part-time workers rather than full-time employees. This is having a effect on overall compensation. The businesses in Japan are being excessively cautious because of the perceived weakness of the economy. They are reluctant to commit to hiring full-time workers.

Its also worth noting that the housing related GDP increase refers to spending on homes, which would include money spent for demolition, construction costs, improvements, and home purchases. However it does not equate to a price increase on homes or rent (inflation).

Actually, looking at housing prices in the Consumer Price Index for March, Japan as a nation has posted only a 0.3% increase in home prices compared to this time last year, while Tokyo city actually recorded a -0.3% decrease in housing prices compared to last March. So any hopes of 2% inflation ain't coming from here.

But it makes me wonder, even with fewer old/cheap homes available (demolition), more new homes (construction), better existing homes (improvements/upgrades) and a supposed increase in the number of home purchases, somehow the prices of homes still hasn't budged. Wow, there must be a serious glut in the home market!

itsonlyrocknrollMay. 20, 2015 - 03:28PM JST

Hi Gary to many assumptions,, I have spent a couple of months on secondment to the OECD dealing with risk forecast in relation to the Euro. The OECD has a comprehensive economic survey of Japan 2015..... Give it a browse when you have time sorry it is some 146 pages....

Thanks, but sorry, I never put much trust in the OECD projections for Japan. Look at their projections for Japan for 2014. In November 2014 they had to revise them downwards... again.... at the beginning of the last quarter!!!

Even if you give them the benefit of the doubt, they project that the Japanese economy in 2015 will grow by 0.75%... a lot smaller than this 2.4% freak number of the headline.

My problem with the OECD is that it looks at the Japanese economy through blue eyes and are blinded by the idiosyncrasies of Japanese economic structural faults. The biggest, just by perusing the report you gave, is that a tightening labor market will stimulate wage hikes, which in turn will stoke inflation.

Japan just doesn't work like that. The absence of any true worker representation (most unions are affiliated to the company) and a declining consumer base because of demographics, means that companies will exploit their existing work force, illegally and legally, rather than raise prices or entice more workers by increasing existing salaries.

What everyone seems to forget about the last round of base pay and bonus negotiations was that Toyota and others like them did not increase base salaries and bonuses because they wished to entice more workers, they did so as a sop to the government's weakening the Yen and making the export conditions more favorable for them.

Japan is a really different animal to the normal liberal democratic states of plurality and interest groups, where changing economic and social conditions lead to a fluidity of power and interests. Without true structural reform so that Japan behaves like a nomal liberal democracy, the OECD will always be shooting blind on its projections for Japan.

UpgrayeddMay. 20, 2015 - 03:41PM JST

Um, no.

Q2 (April-June): 525,479 Q3 (July-September): 522,703 Q4 (October-December): 524,161 Q1 (January-March): 527,283

Ummmm, no.

Japanese official fiscal year is from April 1st to March 31st.

Yamiko Otokawa,

The fact that the yen depreciated against the US dollar does not mean that GDP in Japan itself contracted. Currency movements don't destroy real or nominal GDP as nominated in yen terms.

It does, of course, decrease GDP in US dollar terms but that is not very relevant in such a case. It's more important to gauge real GDP, or actual production by the country, in which case it expanded 0.6% from the last quarter.

kickboardMay. 20, 2015 - 02:22PM JST

The economy shrank 6.4% in April to June last year due to the tax hike. The fact that we are now at +2.4% in less than a year is a positive sign

Not really.

Read Supey's post for the house related distortion of the GDP figures, which is a one off. Also remember at this time of the year the GDP figures for exports always take a sugar high from the Chinese new year holidays.

In the next quarter the economy is expected to shrink by 0.4%, just on capital spending reductions alone, which will wipe out most of the that 0.6% increase.

The real test of this fiscal year will be the last two quarters. Although Kuroda is expected to increase QE in September, most people think that the BOJ has shot its bolt and no amount of increase in QE, by the BOJ, is going to stimulate the economy from now,

It really is in the hands of the Gods how those last 2 quarters will look, but this is the middle of the end for the first 2 arrows of Abenomics.

Posters like Globalwatcher and Dog predicted 2 years ago, at the outset of Abenomics, that Abenomics would give the Japanese economy a 2 year sugar high, which would be followed by a very heavy low. Posters like Jeff Lee and Nigelboy were defending the future prospects of Abenomics.

I'm not saying Globalwatcher and Dog have been proven right, but it sure is looking that way and those last 2 quarters will determine who was right.

Wow. I didn't know everyone on JT was an expert economist. Anyone who believes the MSM is a fool. Japan is either putting out fake stats to downplay its growth or are sterilizing their economy. Either way I have more faith in Japan than the morons running my country (U.S.).

Is growth.

JeffLee

While the others (the ones who "got it right) rabbited on about all the supposed risks from the fiscal debt. Which naturally.... haven't materialized. But, oh, they're right, of course.

Just because it didn't happen today, doesn't mean it isn't going to happen.

Please peruse Kuroda's own comments to Abe in their last meeting - meant to stay secret, but according to a little bird in Kasumigaseki were let slip by MOF officials - and today's article concerning MOF's worries about government growth projections as a solution to fiscal deficit.

JeffLeeMay. 20, 2015 - 07:20PM JST

Yep, it was working...until the consumption tax hike, which was NOT Abenomics, dragged it down. That decision was made with the previous administration. None of the 3 arrows calls for higher taxes.

And as Churchill said to Atlee, 'if my uncle had tits, he'd be my aunt'.

You said Abenomics will work and others said it wouldn't.. they seem to be right...excuses aside.

Yep, it was working...until the consumption tax hike, which was NOT Abenomics, dragged it down. That decision was made with the previous administration. None of the 3 arrows calls for higher taxes.

LOL. That reminds me of the old joke: "Other than that Mrs. Lincoln, how did you enjoy the play?" Sorry, but Abe had the chance to delay the tax increase, but he chose not to. So he owns it. And if his other "three arrows", were not enough to overcome the increase, then Abenomics was a failed plan since the very beginning. End of story.

Well with the yen finally back at its historical value, Japanese companies are mostly back in the black. It was only at the end of 2008 that the yen went to 99 to the dollar. I think many here don't understand that a strong yen, ie less than 100 to the dollar was a small window, and came at a time of a weak dollar. Now that the dollar is strong, the yen has weakened, but so have most other major currencies.