Following the handover of the first quarter 2After a 7% growth report, Japan's economy continued to gain momentum in the second quarter, with gross domestic product (GDP) growth reaching 4.8%。However, just as Japan has come out of the "lost 30 years" of the rising voice, the third quarter GDP cliff **2The 1% result was like a slap in the face, and the Cabinet Office immediately lowered its GDP growth forecast, warning that the economy would shrink again in the fourth quarter. From the frenzy of the bright moments to the worries of the dark, from the lively New Year's overture to the waning year-end tragedy, the Japanese economy in 2023 has left a deep imprint on the ups and downs**, and many contradictions that have led to the loss of stability and continuity of growth have gradually emerged.
The curves of domestic demand and external demand go their own way.
Unlike the contrasting pattern of GDP rising in the second and third quarters of 2023, household consumption demand, which is at the micro level of the Japanese economy, turned negative in the second quarter ahead of schedule, and fell by 0.0 quarter-on-quarter in the following third quarter04%, which correspondingly lowered the economic growth rate by 04 percentage points. While consumption is shrinking, corporate investment is also declining continuously, and corporate capital expenditure in the second and third quarters decreased by 1% and 0.0 respectively6%, which is in line with the Bank of Japan's FY2023 capital investment plan for industries of all sizes, 13The 3% year-over-year increase** is a world of difference.
It is true that the wages of Japanese workers have risen by the highest level in 30 years this year after the general increase last year, but the magnitude of wages cannot keep up with the speed of the depreciation of the yen and prices, and the continuous decline in the real wage level for more than 20 months cannot but seriously damage residents' consumption preferences. In terms of corporate investment, the weakness of the yen continues to push up the cost of corporate imports, and the continuous rise in inflation is mainly driven by the ** of imported products, rather than from the rise in domestic consumer demand.
However, unlike the sluggish domestic demand matrix of the economy, which is composed of consumption and investment, Japan's export performance, which is the core driver of external demand, is relatively active. Statistics show that in addition to a small export in July and August, Japan's exports have been red for consecutive months so far this year, and by the end of the first half of fiscal year 2023, Japan has also recorded a surplus of 62.4 billion yen, and the scale of the deficit has also decreased for five consecutive quarters, down 75 percent year-on-year1%。As such, Japan's economic growth in the first two quarters of 2023 was largely contributed by exports, and even if exports converged in the third quarter, the pull on GDP was almost negligible.
However, after all, domestic demand supports economic growth more than 60 percent, and the contribution of exports is only about 20 percent at mostMore importantly, the growth of Japan's exports is mainly caused by the depreciation of the yen and the decline of international commodities, while the increase in exports is also achieved in a non-benign state of declining imports. However, the recovery process of the global economy is not very stable, especially the economic prospects of the United States and Europe, which are closely related to Japan's exports, are full of uncertainties, and the strength of external demand is obviously not enough to support the stable and long-term development of the Japanese economy.
The boom and bust of manufacturing and service industries are mutually exclusive.
The manufacturing PMI (purchasing managers' index) and the services PMI are the two core indicators that measure the degree of economic expansion. According to the data, by November, Japan's manufacturing PMI had been at 50S&P Global Market Intelligence, which compiles the PMI index, stressed that activity in the Japanese private sector will continue to stagnate in the fourth quarter of 2023. However, unlike the continued sluggish manufacturing PMI, Japan's service PMI is more active. It hit 55 in March this year0 After the fastest increase in more than 19 years, the services PMI has remained above the boom and bust line, with a reading of 51 in November7. It shows that the industry is still in a state of moderate expansion.
In addition to the above-mentioned increase in import costs caused by the depreciation of the yen, which has put pressure on the manufacturing industry, the ** labor cost is also an important reason why Japan's manufacturing industry has failed to release a high level of prosperity. According to the current reality, the wages of enterprise employees are indeed a lot more, but in fact, the owners who can raise salaries are basically large enterprises, and a large number of Japanese small and medium-sized enterprises can only be helplessly wrapped in the rhythm of salary increases due to their lack of strength. At present, Japan's various industries are facing the most serious shortage of manpower in ten years, for small and medium-sized manufacturing enterprises, if the salary range is too small, not only can not recruit the required employees, but also face the pressure of brain drain, forced to only stiffen the salary, labor costs have increased significantly, and at the same time the formation of a "crowding out effect" on equipment investment. From the perspective of external factors, the current Japanese manufacturing industry is facing strong competition from the United States, China and Germany and other countries, especially in the current era of digitalization and intelligence, Japan's manufacturing industry is lagging behind because of lack of innovation.
As far as the services sector is concerned, the continued strong annual performance should be attributed first and foremost to the boom in financial services activity in Japan**, but the largest contributor to the service sector is tourism. According to statistics from the Japan Tourism Agency, the total number of overseas tourists in Japan in the first 10 months of 2023 reached 19.89 million, a year-on-year increase of 10 times. As a result, Tokyo Disneyland's annual net profit hit the highest level in the park's 40 years since its opening, while the net profit of the three major railroad companies, including JR East and JR Central, doubled, and the net profit of All Nippon Airways soared by 48 times, and the performance of many department stores has improved by more than 3 times.
The service industry accounts for nearly 60% of Japan's GDP, and its strong momentum undoubtedly defends the positive growth of the Japanese economyAlthough the manufacturing sector contributes only 20% to the Japanese economy, a long-term weakening of the economy will inevitably lower the overall PMI level. At the same time, it should be noted that due to the weak manufacturing industry, the potential growth rate of Japan's GDP has increased from 4 20 years ago5% down to the current 003%, the largest decline among the G7 countries, if this trend continues, it will be difficult for the Japanese economy to get out of the track of hovering at a low speed.
Short-term stimulus and long-term constraint are in dilemma.
In response to the persistently sluggish domestic demand and to further boost consumption, Fumio Kishida** recently launched a 17 trillion yen stimulus package, which will first give out 70,000 yen in subsidies to low-income families within this year, bringing the total spending amount to 11 trillion yen, followed by a 30,000 yen reduction in income tax and 10,000 yen in resident tax per person for taxpayers and their dependents from June next year, for an overall tax reduction of about 36 trillion yen;At the same time, Japan** has invested an additional 800 billion yen to extend the payment of subsidies until the end of April 2024 to curb oil prices and utility bills. In order to ensure that the above expenses are realized, Japan** has added an additional 13 in fiscal 2023A budget of 1 trillion yen.
According to estimates by the Cabinet Office, the new stimulus package will boost economic growth by 12%, but it is worth noting that after the bursting of the bubble economy, Japan has not actually given up the stimulation of economic growth, and the loose monetary policy alone has lasted for 22 years, during which the Japanese Ministry of Finance not only issued a huge amount of government bonds, but the Bank of Japan also continued to increase liquidity and buy itself as the largest holder of government bonds, and then ** took the "fiscal monetization" funds to expand the scope and scale of public investment, including many structural tax cuts. If it weren't for the Fed's 11 interest rate hikes after the epidemic and the combined efforts of geopolitical forces to push up international commodities**, it is estimated that Japan may still be struggling with deflation.
Clearly, short-term stimulus will not break the constraints of long-term bottlenecks. Japan is currently the most aging country in the world, with nearly 30% of the elderly over 65 years old, and the number of newborns falling below 800,000, and the total population has been negative for 12 consecutive years. The aging population and declining birthrate mainly constrain the long-term economic development through three channels: the reduction of labor force, the reduction of capital input, and the hindrance to the improvement of total factor productivity. At present, the ratio of Japan's working-age population is only 2 1, the annual rate of corporate capital expenditure has fallen to about 3%, and the total factor productivity is 038%, which is lower than the average for the past decade. In addition, the aging of the population will inevitably increase the social security expenditure, and the annual social security expenditure will account for more than one-third of the total fiscal expenditure in JapanAt the same time, the average savings of households over 50 years old in Japan currently exceeds 10 million yen, and the average savings of households over 60 years old exceeds 22 million yen, but the debt of households under 30 years old is twice that of savings.
The author is a director of the China Marketing Society and a professor of economics at Guangdong University of Foreign Studies
*: International Business Daily Author: Zhang Rui.