Japan flirts with recession after output, exports drop

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  • 0

    onedragon

    Everything in the U.S. is now Samsung and Hyundai,not Sony and Toyota.Kinda makes you wonder......

  • 12

    some14some

    Japan flirts with recession after output, exports drop

    This is the result of just two arrows of "Abenomics" scared to think that 3rd one is still there in reserve.

  • 7

    onagagamo

    No surprises here.

  • 11

    Elizabeth Heath

    Anyone with a basic knowledge of economics knew this Abenomics nonsense would just make things worse.

  • 0

    SenseNotSoCommon

    Stagflation? Yum!

  • 3

    umbrella

    abe's nomics really are doing well aren't they! What a hopeless PM he has been. Only good thing is, is that he is forever out of the country.

  • 11

    marcelito

    This is impossible - the supreme leader Shinzo says all is just dandy and going according to plan. Its the damn Reuters reporters fault - those gaijin just don`t understand Japanese culture and economy and are causing "misunderstandings " again. Time for NHK to put out "correct , shiny interpretation "of these statistics for the masses.

  • 11

    jerseyboy

    Economists are considering cutting their forecasts, with some pencilling in a 7-9 percent plunge. That could be so deep that Japan barely grows in the fiscal year to March.

    Wow, that's a prtty serious plunge. Just shows what many of us here said from the very beginning -- "Abenomics" was just a slick PR term for another LDP-led pork-barrel spending program that temporarily pumped up economic activity but had no long-term impact, and will just add to Japan's staggering debt. And if the economy does go into recession, it will get even worse, since tax revenues will drop, despite the tax increase. Called a lose-lose.

  • 3

    Papi2013

    This was already predicted last year here, by this economist. It predicted that unless Japan is successful devaluing their currency for at least five straight years, and cut the value by at least half, the initial success by Abe's policies wasn't going to have the staying power. It says Japan's policies is uncharted territory, which is doomed for failure.

    http://www.businessinsider.com/japan-economy-disaster-2013-5

  • 4

    5petals

    I find it interesting how one week you see Japan is doing so well and Abenomics is working but you suspect something is wrong (as is usually the case in Japan) then you get this data.

    Brinkering on reccession? I wouldnt say thats a success. Lets see what happens next quarter.

  • 1

    kaimycahl

    I find this article hillarious I guess it depends on which newspaper you are reading or getting your information from.

  • 10

    sighclops

    Curiously, the price of everything has gone up, yet salaries have remained the same or shrunken... That's not how this was meant to work!

  • 1

    5petals

    @papi2013

    I think those analyst are right about some issues facing Japan, but there is a disconnect about how group or Japan Inc really works. True, there isnt much hope for Japan when it comes to inflation, wage increases, immigration or how a normal countrys economy works (increased productivity with population). What I think this administration is counting on is tapping back into the past. How else are you going to get those oldies and corps to relase those savings? Through war bonds, nationalism and group think. Its been done and it was successful in the past. This seems to be the missing link that many gloss over when discussing Japan. Things get bad enough, it will kick in.

  • 8

    tmarie

    So what, Abenomics ISN'T working???? What???? Gee, who ever would have thought that??

  • 7

    papigiulio

    Running out of air to sigh.

    Can we for once have one capable PM that can pull this countries economy out of the shitter. Cut down on government spending and do what is right for the country.

  • 8

    NeoJamal

    Japan had its chance to transition from a mass manufacturing economy to a high end manufacturer like Germany or becoming a fiscal services hub like Singapore and Hong Kong, but they missed it by not taking English language education seriously and stubbornly sticking to developing economy business models and policies. Now that the South Koreans have figured out how to implement Japan inc. for themselves, they are kicking our arse with their cheaper wages.

    How is Japan going to feed the 1st wave of babyboomers who are going to retire from the workforce en masse within the next 5 years? This is so horrible.

  • 5

    Jimizo

    Just 21% of Japanese people had a positive view of the Abe cabinet in the last poll I saw. His personal approval ratings are now below 50% and on a downward trajectory. His nationalistic chest-thumping isn't deflecting enough attention away from the fact that his grand economic plan ( warmed-up and repackaged LDP past failures ) isn't cutting it. I can't see him being in power this time next year.

  • 7

    BNlightened

    My central argument has always been that: A: "Abenomics" was nothing more than a massive ramping up of the same tired governmental policies of near zero interest rates, deficit spending, and funneling yet more public money into the very same construction companies that have always been beneficiaries of such pork in the past.

    The difference this time (besides the scope of the money printing and Abe's bogus promises for "deregulation and reform at some as-yet undecided time in the future...") was the unrelated but simultaneously enacted sales tax shock. But again, I've argued that B: Japan in 2014 is not the same Japan it was 10 years ago, and certainly different than it was back in 1993 (the last time the tax was hiked) or 1989 (when it was introduced-ironically enough, just before Japan's economic "bubble" burst.)

    Japan is a different country now than it's ever been before due to three things: first, the population has aged considerably, all at once and in massive numbers. They're getting ready to retire or have already started the economic process from earner to government pension moocher/private savings penny-pincher.

    Second, there is increased competition in the Japanese market from without (i.e. from foreign imports and "Japanese" brands importing from abroad; products Japanese are now increasingly craving...partly because they are foreign, but mainly because of the price!) and competition from within (e.g. Uniqlo, 100 yen shops and Seiyu/Walmart/Costco-style generic "brands" cutting into traditional "brands" and their overpriced equivalents.)

    Third and finally: changes in the labor market, including more temp-staff, "full-time" part-timers and Freeters, the inflow of previously non-working women, housewives and seniors, and the ever-greater concentration of workers into fewer "mega-city" destinations. More and more citizens are working not for annual salaries and bonuses, but for stagnantly-low hourly wages (often with less rights, less job security and severely-limiting pay ceilings guaranteed by recent "employment reform" bills enacted in order to...ahem...jump-start the economy.)

    All these changes spell disaster for a country blindly seeking to "tax and spend" its way out of systemically-ingrained economic troubles by hiking the prices of everything its people are offered. The country's fundamentally changed, even if the "solutions" of its ruling class remain stubbornly similar to the failed policies of yesteryear. When greying boomers and equally hard-pressed single youths find that their monthly funds buy less each time they go to market, more often than not-they will simply buy less at the market!

    Behold the asinine contradictions of Abenomics...and tremble for Japan's future.

  • 1

    Wakarimasen

    Evedntually printing money doesn't work. We need the BoJ to aggressively sell yen etc etc. world economy is a giant experiment waiting to blow up.

  • 3

    Disillusioned

    I've been saying all along that Abe's economic strategies would fail because the markets he is relying on do not exist for Japan anymore and this is the proof! He has just recycled the same old bat-crap from 30 years ago with no innovation or imagination what-so-ever! All he has achieved is, increased the public debt and made people poorer. And, there are still more tax increases to come! Japan's economy is doomed under this government and my advice to foreigners is, make as much as money as you can and get the heck out of here as quickly as you can.

  • 3

    umbrella

    Curiously, the price of everything has gone up, yet salaries have remained the same or shrunken... That's not how this was meant to work!

    Abe is only concerned about the rich, the elite and the companies. He doesn't give a toss about the little people. So, from his point of view, it's all working very well I guess.

  • 0

    crustpunker

    Look, we all know that this facade of "getting Japan out of stagnation" is..

    A. Not working

    B. Doomed to fail.

    Now, everyone giving examples of WHY it isn't working is cool. I think we all get that and it is informative but, the thing that worries me is that Abe and the elites are doing this for another reason. They aren't stupid. They have some of the best minds and experts PURPOSELY coming up with a policy that is doomed to fail. To me, it is more interesting to think about why they are doing something that by all rights, they should fully well know is bound to end in ruin....

    unless that is the goal for some reason....

  • 0

    fxgai

    The sputtering recovery is a far cry from Prime Minister Shinzo Abe’s early success in lifting growth and halting deflation through aggressive monetary stimulus and government spending.

    In doing so, Abe picked the easy fruit, but seems unwilling to put in the hard work to nurture a bigger tree for the future.

    His third arrow should have been the centerpiece of Abenomics, but he hasn't produced anything of significance, just a load of fanciful happy talk.

    In the meantime, the government has continued to spend far more money than it hauls in in tax revenues, loading the economy down with even more debt.

    It's not too late, but Abe needs to spend every waking hour of the day for the next 3-6 months actually producing a 3rd arrow if he intends to be a long-term PM.

  • 1

    Magnet

    Abenomics. Pssh. Garbage.

  • 3

    bruinfan

    Japan needs to give people more money for discretionary spending. They should deregulate the telephone/ cell phone industry, get rid of JA and remove sales tax on food and medicines.

  • 2

    JeffLee

    "So what, Abenomics ISN'T working???? "

    Hello? The tax hike isn't part of Abenomics. The hike was negotiated long before Abe entered the scene, with the DPJ, LDP as well as the other parties.

    In fact, raising taxes - an anti-stimulus measure - amid Abe's stimulus is irrational, and I predict it would put an unnecessary drag on the economy.

  • 3

    sangetsu03

    Japan is now paying the price for it's previous business and political practices. By keeping the domestic market closed to competition, and keeping domestic prices artificially high, they have driven up the cost of living to the point that it has become too expensive to have children. So now fewer children are being born, the population decreases, and the economy shrinks.

    And of course, the very things which Japan needs to do to lower the cost of living, like removing the tariffs on foodstuffs and staples, getting rid of price-fixing, and lightening the tax burden, are not all all being addressed by abenomics.

  • 2

    5petals

    I think Sangetsu is right. The very things Japan needs to do, it purposely avoids. And it avoids these issues for the same reasons it has avoided them before. The third arrow has never materialized. TPP has stalled, immigration avoided. More women and foriengers in dead end service jobs, thats all. Some low hanging fruit like casinos might get ojisan and obasan to spend their savings, other than that I see no reform. They might end up gettting the corporate tax lowered, but by then I think the damage will be too much for it to make a difference.

  • -5

    ozellis

    Don't believe everything you read, the economy is doing just fine. As a couple of enlightened posters has mentioned previously, it just depends on which paper/article you look at.

  • 7

    Crush Them

    I am kind of happy. Why?

    Because I want Abe out on principle. But that would never oust him. Unlike myself, most people think with their wallets it seems, and if this keeps up, it will drive Abe out.

    I can handle being poor. I cannot handle having a war apologist paving the way for more war in the government of the country I live in.

  • 1

    bruinfan

    @sangetsu03 and @5petals,

    Good comments. The question I have ... Is Abe trying to launch the "3rd arrow" and being blocked by the bureaucrats, or is he just not really trying?

  • 0

    sfjp330

    serendipitous Aug. 01, 2014 - 12:29AM JST Why, then, is Japan seen as a loser? On the official gross domestic product numbers, the United States has ostensibly outperformed Japan for many years.

    If you can choose between Tokyo and Shanghai, and you pay no taxes one place and 25 to 35 percent at home, you’re encouraged to move jobs overseas. For majority of the Japanese 20,000 companies operating inside China, the untaxed cash keeps building up and few are choosing to bring it home, instead preferring to borrow for any domestic cash needs. Until they change the tax law, there’s not much other than extreme distress in Japan that would precipitate a repatriation. Japan goverment should impose rules to make it tougher for companies to shift earnings out of the Japan.

  • 1

    Michael Net Work

    Abenomics. Worked only for Toyota and Honda. But the rest of the population to include Sony, did not work.

  • 1

    Nichikolohe

    Hi! It's me again, the "Abe-geddon" (sic: The Sky is Falling) man (chicken)... Bring back Noda-pragmatism! At least we could afford imports back then and we had discounted highway tolls and affordable gasoline (bacause the yen was strong).

    Of course, it would be good to have a Bank Governor who understands global economics. I kinda like Sakakibara (MOF) and hearken back to his prediction in March 2013 that "CPI will never reach 2%" (Due to "the integration of the Japanese economy with the rest of east Asia").

    Can we get back to a real economy now and not some contrived political economy that only serves the whim of pork-barrel and cozy relationships?

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