Japan’s economy remains weak, but it did better than expected in April, the latest data showed yesterday.
Factory output fell 3.5 percent in April from a year earlier and consumer spending edged lower, though both improved from the month before and better than most forecasts.
Earlier data showed the consumer price index fell 0.3 percent in April, for the second straight month of deflation. However, excluding both energy and volatile fresh foods, it rose 0.7 percent.
Though the latest data present a mixed picture, Japanese Prime Minister Shinzo Abe has won grudging support for a postponement of the next sales tax increase from a key ally, Japanese Finance Minister Taro Aso.
“It is one option to help support consumer spending,” Aso said of the likely delay.
Aso was obliged to at least try to push back — with Japan’s public debt at nearly 240 percent of its GDP, putting the nation’s accounts in order is an urgent priority — but those favoring a delay argue the recovery is too weak to endure a fresh hit to consumer spending from a tax increase.
They also contend that the tax increase could backfire if it causes such a downturn that government revenues actually contract.
In April, consumer spending fell 0.4 percent from a year earlier, though incomes rose 0.7 percent. Unemployment was flat at 3.2 percent.
Industrial output rose 0.3 percent from March, stronger than expected, in one sign that the latest dip in growth might be moderating, Marcel Thieliant of Capital Economics said, but he added that private investment remains weak.
The last time Japan raised its sales tax, to 8 percent from 5 percent in April 2014, the economy fell back into recession. Growth has been uneven since then and Abe opted to postpone the next increase to 10 percent, set for October last year, to April next year.
“The government probably wants to avoid delivering a hammer blow to a fragile economy without seeing solid improvement at the fundamental level,” CMC Markets analyst Margaret Yang (楊燕) said in a commentary.
By pushing back the tax increase, Japan risks having its credit downgraded, though the impact would be limited by the fact that almost all of its debt is owned by domestic investors or the central bank.
“Whichever policy decision we take, there will be a risk,” ruling Liberal Democratic Party Secretary-General Sadakazu Tanigaki said.
The latest plan calls for the tax increase to take place in October 2019. Abe reportedly rejected the idea of dissolving the lower house of parliament and holding a snap election next month, when Japan is due to hold a vote for the less powerful upper house.
Parliament was due to vote later yesterday on a no-confidence motion against Abe put forward by opposition parties, but the Liberal Democratic Party’s strong majority means they lack the votes to get it passed.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to