PHX787
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Japanese GDP Soars 3.8%

Mon Sep 09, 2013 8:48 pm

Mr. Abe must really be doing something right here.

The Gross Domestic Product, April-June Real growth (this would be Quarter 1 in the Japanese economical calendar) grew at an annualized rate of 3.8%.

This is without the announcement of the Olympics the other day.

This was very unexpected, with just last week some investors in japan saying that the GDP wouldn't soar as high as they thought.

This is some fuel for the assertion that Japan should raise the consumption tax. The strongest argument against raising the tax is the catastrophic results of the last raise in 1997....but currently, Asia is not in a recession. S. Korea seems to be doing well, and we all know what China's doing.

I say raise the tax and alleviate the debt for now, and then when the cogs are spinning at warp speed, cut the tax and let the trickle down effect take hold. The bulk of Japanese investment this quarter is in southeast Asia now, and Abe was very smart to jump right into the Myanmar market. So let's hope this works. The Olympics will definitely provide a huge boost to the Japanese economy as well.


Some good and happy times in Japan recently. Thoughts?

Here's the Japan Times article:
http://www.japantimes.co.jp/news/201...pgraded-to-annual-3-8#.Ui4yHbwhxPY
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romeobravo
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RE: Japanese GDP Soars 3.8%

Mon Sep 09, 2013 9:55 pm

GDP in isolation is meaningless.

Is it tangible growth or just deficit spending/money printing? ...I don't follow the Japanese economy closely.
 
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Aesma
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RE: Japanese GDP Soars 3.8%

Mon Sep 09, 2013 10:33 pm

Yeah it's money printing. Not that it doesn't have its merits, especially when the US is doing it to the detriment of every other country not following.
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Aaron747
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RE: Japanese GDP Soars 3.8%

Mon Sep 09, 2013 10:43 pm

Quoting RomeoBravo (Reply 1):
Is it tangible growth or just deficit spending/money printing?

There is some tangible growth in services and high-end financial services. Online retailers and big chain stores are seeing real sales growth. The adjustment in exchange rates has been especially healthy for the multinational automakers. Construction firms are also seeing good numbers, and that is not only from public works deficit spending. In Tokyo, Osaka, and Nagoya, there are major redevelopment projects under way in key districts of each city.

Even so, there are still many signs that are not good. The large export conglomerates like Panasonic and Sharp are still in precarious positions with many more layoffs coming. Despite having great products, their cost structures are out of line with the rest of the industry abroad and the domestic market within Japan is really quite difficult now. The biggest problem is the support infrastructure of suppliers to large exporters is rapidly hollowing out, meaning that cities and rural areas not near the 4 largest Japanese cities are rapidly losing their traditional employment base. This is putting quite a load on the government since the LDP has traditionally retained their power by serving the agricultural hinterlands. I don't see any signs of this changing anytime soon - in fact, I would expect layoffs and factory closings to accelerate.
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mham001
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RE: Japanese GDP Soars 3.8%

Mon Sep 09, 2013 10:56 pm

Quoting Aesma (Reply 2):

Yeah it's money printing. Not that it doesn't have its merits, especially when the US is doing it to the detriment of every other country not following.

And yet, third-world countries around the world are crying now that those policies are about to end. It has hardly been detrimental to them.
 
Rara
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RE: Japanese GDP Soars 3.8%

Mon Sep 09, 2013 11:51 pm

Quoting PHX787 (Thread starter):
The Olympics will definitely provide a huge boost to the Japanese economy as well.

Unlikely. Rule of thumb with the big sports events is that you're better off without them, economically speaking. Sure, new infrastructure, construction projects etc. will provide a short-term boost to the economy, but it's still deficit spending, and usually ill-allocated.

Conventional wisdom has it that the Football World Cup in Germany 2006 was the "one exception to the rule", that it paid for itself all things considered, but recent analysis showed that even this event cost more than it earned.

In terms of real economics, a large sport event doesn't give you more than a couple more visitors in a very narrow time-frame. That's it. On the cost side, however, you have to pay for organization, security, stadiums, infrastructure, after-use etc., none of which would have been needed without the event.
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Klaus
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RE: Japanese GDP Soars 3.8%

Tue Sep 10, 2013 6:11 am

Quoting PHX787 (Thread starter):
Mr. Abe must really be doing something right here.

Really? If I remember correctly, he had little to nothing to do with this since he just took over from his predecessor.

Growth is also a relative metric, so just an elastic rebound from a previous depression (such as the Fukushima disaster) is also nominally showing up as "growth" even when it isn't that, really.
 
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Aaron747
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RE: Japanese GDP Soars 3.8%

Tue Sep 10, 2013 2:24 pm

Quoting Rara (Reply 5):
Unlikely. Rule of thumb with the big sports events is that you're better off without them, economically speaking. Sure, new infrastructure, construction projects etc. will provide a short-term boost to the economy, but it's still deficit spending, and usually ill-allocated.

Except in Tokyo's case the lion's share of needed infrastructure is already there.

Quoting Klaus (Reply 6):
eally? If I remember correctly, he had little to nothing to do with this since he just took over from his predecessor.

Not quite correct since he has been very active with getting the BOD of the Bank of Japan to play ball on quantitative easing. Jury is still out on whether that's a good idea at this point - but in a country where these decisions usually come in yearlong increments instead of months, Mr. Abe has made progress with the old men running the pursestrings.
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Aesma
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RE: Japanese GDP Soars 3.8%

Tue Sep 10, 2013 5:01 pm

Quoting mham001 (Reply 4):
And yet, third-world countries around the world are crying now that those policies are about to end. It has hardly been detrimental to them.

Bankers from those countries yes. Meanwhile there are hunger riots because prices are skyrocketing.
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