By Stuart Burns
The value of Japan’s shipments has increased 10% in May from a year earlier, the most since 2010, says Bloomberg, as the economy responds to Japan Prime Minister Shinzo Abe’s stimulus measures (now popularly known as “Abenomics”).
Industry loves him – the yen has fallen against 15 out of 16 currencies in the past six months, boosting the competitiveness of Japanese manufacturers. Shipments to the U.S. rose the most in a year, jumping 16% by value from a year earlier, as motor vehicle exports there climbed 13%. Exports to China gained 8.3%, but the most since February 2011.
Only sales to the European Union have fallen, by 4.9%, dropping for a 20th month, but sales have fallen to Europe for every country in the world, so that holds no surprises.
Why do consumers love him?
Consumers love him as a surge in corporate profits, stocks, condominium values and gold club memberships are seen as signs that these consumers are willing to throw off the pessimism of recent years and spend money, particularly on luxury goods.
Even the G8 seemed to love Mr. Abe and his Abenomics, withholding any direct criticism of his policies at the recent G8 summit in Belfast, Northern Ireland, and instead praising his efforts to stimulate the Japanese economy.
Prime Minister Abe is careful to promote the three-pronged nature of his policies, lest they be perceived as simple old-fashioned suppression of the value of the currency, or devaluation. The policy is said to include fiscal stimulus, looser monetary policy and longer-term structural reforms.
The economy seems to be responding. Bloomberg reported Japan’s gross domestic product [GDP] jumped at an annualized 4.1% pace last quarter, propelled by consumer spending and exports, although worryingly business investment declined. GDP will rise 2.85% this quarter, then sustain 3.25% gains in the following two periods, according to the median estimates in Bloomberg News’ surveys of economists.
Next year, growth is forecast to slow when the government boosts the sales tax, the news organization reported.
It’s Always Sunny in Tokyo
Sounds like all good news, an amazing turnaround and a credit to Shinzo Abe’s strong leadership (even if there is much grumbling among Japan’s major trade partners that this is being achieved at their expense).
But is it the success story it is being purported to be?
To be continued in Part Two.