- 2018-10-12
The foundation of Japan's economic rebound is unstable
Data from the Cabinet Office of Japan shows that from April to June this year, Japan’s economy grew by 0.5% month-on-month, while the year-on-year decline from January to March was 0.2%.
The year-on-year growth rate was 1.9%, which was higher than analysts’ previous expectations and exceeded the 0.3% market consensus compiled by Bloomberg News.
After eight consecutive quarters of economic growth ended from January to March, these data quickly reversed the situation and broke the winning streak that has never been seen since Japan’s “miracle” boom in the 1980s.
"The Japanese economy has experienced an ideal rebound, partly due to strong corporate activity," said Hideo Kumano, chief economist of the First Life Research Institute.
From the perspective of economic growth, domestic demand is the main driving force for Japan's economic growth, which has increased by 0.6%, while external demand has dropped by 0.1%. Among them, among domestic demand, which accounts for 60% of Japan's GDP, personal consumption increased by 0.7%, and automobiles, air conditioners, and white goods increased significantly. According to analysis, the energy-saving home appliances that became popular in 2010 have reached the renewal and elimination period. Therefore, investment in private equipment increased by 1.3%, which was higher than the 0.5% growth rate in the first quarter, and achieved continuous growth in the four quarters. In particular, investment in machinery and equipment in the manufacturing industry was active, showing that enterprises rely on the shortage of manpower. As equipment investment replaces manual labor, software investment in the construction industry has also increased. However, residential investment fell by 2.7% and continued to decline for four quarters. Public investment fell by 0.1%, although the decline has slowed down for four consecutive quarters. Government consumption grew by 0.2%, which was the same as the previous quarter. In terms of international trade, exports increased by 0.2%. Although it achieved growth for eight consecutive quarters, the growth rate was lower than the previous quarter. Imports increased by 1%, especially due to the increase in international oil prices and other prices, which raised economic costs.
Some analysis here pointed out that the increase in household income is the main reason for stimulating the rise in domestic demand. With the Japanese government repeatedly calling on companies to increase wages for employees, not only has large companies increased their salaries significantly since 2018, but some small and medium-sized enterprises have also increased their salaries by 20%. The highest level in the past year. According to statistics, the nominal wage of Japanese employees rose by 4.3% year-on-year. Excluding the increase in the social burden, the actual increase was 1.9%, the largest increase since the second quarter of 1994. Statistics show that there have been some changes in the Japanese model of relying on external demand to drive economic growth over the years. Domestic demand has become the main driving force for growth this quarter. Domestic demand has boosted GDP by 2.4%, but external demand has declined and exports have declined. At the same time, due to the increase in crude oil prices, imports have increased. In the end, external demand played a role of -0.5% on GDP.
But analysts warn that the US-led trade war may be a major risk factor, as the Chinese economy is still struggling to win a long-term battle against deflation.
US President Donald Trump upsets competitors and allies with harsh trade rhetoric and a series of tariffs that affect industries ranging from agriculture to automobiles. Trump's threat to impose strict tariffs on imported cars in the world's second largest auto market is still a concern for Japanese automakers.
"Worries about potential auto tariffs cannot be ignored," said Yusuke Shimoda, an economist at the Japan Research Institute. "As automakers have huge supporting industries, the impact of tariffs will spread widely," Shimoda told reporters.
Arita, a senior economist at the Mizuho Research Institute, estimates that US tariffs could cost the Japanese auto industry as much as $10 billion.
And threatened to impose auto tariffs, which may hit Prime Minister Shinzo Abe's boasting "Abenomics" policy. Abe’s goal is to secure his prime ministerial position by winning the party’s September presidential election.
At present, whether the Japanese economy can continue to grow has aroused social concern. On the one hand, due to the high crude oil prices, the prices of gasoline, electricity, and gas in Japan will rise, which will offset the increase in household income to a certain extent. At the same time, the Japanese government has determined that the consumption tax will be raised from 8% to 10% in October next year, which will also have a greater psychological impact on consumers. On the other hand, from the perspective of the international economic situation, the trade frictions provoked by the United States cast a shadow over the world economy. The Organization for Economic Cooperation and Development previously issued a report warning that if tariffs between the United States, Europe and China rise by 10%, the total world GDP will fall by 1.4%.
According to a survey by the Cabinet Office of Japan, orders for the machinery manufacturing industry will decline in the third quarter of this year. Ryutaro Kono, chief analyst of Japan’s BMP Securities, pointed out that the trade war initiated by the United States may intensify and increase uncertainty in the world. Japan The company's equipment investment in the third quarter may tend to be conservative. At the same time, the impact of the international economic environment on Japanese corporate psychology will become more serious. The Organization for Economic Cooperation and Development predicts that the risk of stagnation in world trade is increasing. In particular, the trade war initiated by the United States will bring a greater blow to the manufacturing industries of various countries. If the United States raises tariffs on imported cars, Japan’s primary industry of automobile manufacturing The industry will suffer a severe impact and will expose Japan’s GDP to downside risks. Statistics show that most companies predict that the economic situation will become severe in the first quarter of next year, and some companies say that the fourth quarter of this year will enter the economic winter.