Japan yesterday received a brighter assessment of its economic future, with a key central bank report highlighting an accelerating recovery and easing price declines.
In its semiannual outlook, the Bank of Japan (BOJ) predicted that the world’s second-biggest economy would see faster growth this fiscal year, which began on April 1, and a possible end to deflation within two years.
GDP will probably expand 1.8 percent this year, the central bank said, better than its previous forecast of 1.3 percent.
The report credited robust growth in overseas markets, particularly in Asia, for fueling Japanese exports and production.
Stock prices and corporate profits are up, which should boost capital expenditures and eventually lead to more jobs, higher wages and stronger domestic demand.
“Given these developments, the momentum for a self-sustaining recovery in private consumption is likely to build gradually,” the BOJ said.
However, Japan remains the slowest-growing economy in Asia despite optimism about the short term. It must face harsh realities in the years ahead, and the central bank warned of skyrocketing public debt, a shrinking population and a new global economic order.
“It is becoming clear that a substantial change in the global economic structure is taking place, and each economy faces new challenges to achieve more balanced sustainable growth,” it said.
The world is not returning to its pre-financial crisis state, the central bank said. The growing influence of emerging economies and commodity exports has “significantly affected” resource prices and global capital flows.
The eight-member policy board voted earlier in the day to keep its key interest rate near zero and said it would redouble efforts to boost the economy. It vowed to maintain an “extremely accommodative” monetary policy to keep credit flowing and fight deflation.
Board members agreed the central bank needed to do more to “contribute to strengthening the foundations for economic growth,” signaling a more proactive approach. As part of those efforts, Bank of Japan Governor Masaaki Shirakawa has directed staff to find ways of financially supporting banks.
For now, Japan’s economy still needs all the help it can get.
Government data yesterday showed that the country’s recovery, though advancing, remains uneven. Unemployment worsened, and prices continued to fall in March. At the same time, household spending rose and factory output expanded.
Japan’s seasonally adjusted jobless rate rose to 5 percent in the first increase in five months, the data showed. The figure is up from 4.9 percent in February and missed Kyodo News agency’s forecast for the rate to be unchanged.
The number of jobless totaled 3.5 million in March, up 4.5 percent from a year earlier. Those with jobs fell 0.6 percent to 62.1 million.
Goldman Sachs economist Chiwoong Lee describes the labor market as having “no spark.”
“Viewed over several months, the path is flat,” he said in a note to clients. “Deterioration has eased but not given way to improvement.”
That has dragged prices lower as stores scramble to attract increasingly finicky consumers.
Japan’s core consumer price index, which excludes prices of fresh food, declined 1.2 percent in March from a year earlier. The result marked the 13th straight month of decline. Prices fell for a swath of goods from fuel to furniture.
Lower prices may seem like a good thing, but deflation plagued Japan during its “Lost Decade” in the 1990s. It can hamper economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases. It also can increase debt burdens.
Preliminary data show industrial production edged up 0.3 percent in March from the previous month on growing export demand.
Contributing to the rise were makers of electrical machinery, transport equipment and steel products, the Ministry of Economy, Trade and Industry said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day