By Jon Day TOKYO Japan (Xinhua) --
Japan’s economy, the third-largest in the
world, has huffed and puffed its way through 2017, mired
in the same negative cycles since its asset price
bubble’s collapse in the early 1990s.
while rich in Japanese Prime Minister Shinzo Abe’s
magniloquence, is still lacking in actual invigoration,
experts have said.
glance, the world’s third-largest economy growing an
annualized 2.5 percent in the July-September quarter and
beating the preliminary reading of a 1.4 percent
expansion, bodes rather well for Japan.
comes thanks to a significant upgrade to capital
expenditure figures driven higher by an upswing in
tourism owing to relaxed visa regulations, yet against a
very bleak backdrop of mounting public debt and the
ever-increasing threat of what economists have dubbed as
a ticking “demographic time-bomb.”
years and various incarnations of the prime minister’s
“Abenomics” policy mix, which includes the Bank of
Japan’s (BOJ) ultra-loose monetary easing policy, Japan
has yet to break free from the shackles of deflation and
the “deflationary mindset” plaguing its people.
Japan has a
public debt level globally never seen before at more
than double the size of its 5-trillion-U.S.-dollar
economy. According to the Organization for Economic
Cooperation and Development (OECD) in its latest
evaluation, Japan, with its debt the highest in the
industrialized world, poses “a serious risk.”
sky-high debt resulted from the government here being
unable to give up its decades-long fiscal addiction of
lending, spending and borrowing.
over-reliance on debt has been prolonged by the
government urging citizens to buy government bonds (JGB’s)
in a cycle that has seen the government, in the private
sector, lend and spend at will by constantly obtaining
new debt borrowing,” said Hisao Katayama, a senior
equity analyst at Nomura Securities Co.
loose monetary policies, when other major economies are
tightening theirs, are a double-edged sword,” Katayama
policies include drastically lowered interest rates
aimed at bolstering capex and wages, increased public
services investment, has, in fact, as with years passed,
hammered the government’s balance sheet this year.
Expenditures have continued to spiral way beyond
stimulus targets and a further delay to a scheduled tax
hike for a third time to 2019 will prolong the deficit,”
Japan’s Economy Minister Toshimitsu Motegi, the recent
run of unbroken economic growth and the increasing
output gap is evidence that Japan can finally escape
from decades of deflation, especially if wages can be
“There are a
lot of improvements in the economy that point toward an
end to deflation. To make sure this happens, we need to
focus on productivity and wages,” Motegi said in
economists have been quick to point out the fact that
wages this year have stagnated and consumer prices have
been painfully slow to rise.
wages rose just 0.2 percent in October from a year
earlier, after adjustment for inflation, according to
the labor ministry, marking their first rise since
December 2016. A month earlier, wages dropped 0.1
percent from a year ago, down for a fourth consecutive
according to global consultancy firm Mercer, wage
increases henceforth are not looking too bright either.
global compensation planning report and total
remuneration survey, conducted in the second and third
quarters of this year, concluded that next year, Japan
would register the lowest pay rises, along with
Australia and New Zealand.
wholesale prices increased 3.5 percent on year in
November, according to the BOJ, with prices rising for
the 11th straight month, core consumer
prices, which exclude fresh foods because of their
volatility, increased just 0.8 percent from a year
earlier, despite the central bank’s ultra-loose monetary
This is still a long way off the BOJ’s 2 percent
inflation remains well below the central bank’s 2
percent target owing to lackluster domestic demand.
Companies are reluctant to raise wages despite profits
amid an uncertain outlook, leading to households
tightening their purse strings and compounding the
nation’s deflationary mindset,” said Akihiro Hoshino, a
senior quantitative strategist at Nomura Holdings Inc.
rather puts pay to the government heralding a
domestic-driven economy that has all but escaped from
"This is simply not the case and headway this
year has been negligible,” Hoshino said.
latter half of this year a tsunami of rigged data
scandals swept across Japan, which has already been
suffering from its regional neighbors surpassing it as
the epicenter of the high-tech world.
Materials Corp.’s subsidiaries were found to have
falsified quality data for products used in multiple
industries, including in equipment used by Japan’s Self-Defense
Forces (SDF), which compounded growing concerns about
quality control in the manufacturing sector here.
scandal to cast serious aspersions on quality control
protocols and overall corporate governance in the
manufacturing sector, came on the heels of data
falsification improprieties at Kobe Steel Ltd., and
uncertified safety checks carried out by automakers
Nissan Motor Co. and Subaru Corp., which led to
sent shock waves through the global manufacturing
falsification and uncertified safety checks have
seemingly been inherent practice for decades at some of
Japan’s scandal-mired manufacturers, as recent
investigations, and the executives who were found to
have turned a blind eye, have since revealed.
once-stellar image for producing high-quality, safe,
precision-made parts and components for domestic and
global clients, has been severely and, perhaps,
irrevocably, degraded, authorities on the matter have
said, with the economic fallout, as yet, hard to
this year, as with years past, and in years looking
ahead is facing an unprecedented meltdown in population.
population in 2010 stood at around 128 million, but
since then drooped to 126 million and will continue to
decline with the pace set to accelerate. Experts believe
Japan’s population will shrink by 0.4 percent annually,
with the pace of decrease believed to accelerate to 1.0
percent annually by the 2040s.
that by 2050, Japan will have 23 percent fewer citizens.
According to demographers, the problems will not stop
They see current trends continuing to the end of
the century, when Japan’s population falls to 50
million, a mere 40 percent of its all time high, as the
elderly continue to live longer and the birthrate
continues to decline.
fundamental economic problems still remain, according to
Japan may be
able to shake off its manufacturing scandals and such
like, in the short-term, but “what it can’t shake off is
its rapidly aging and shrinking society, believed by
some economists to be a ticking ‘time-bomb’ for the
economy,” Katayama said.
that beyond all, this is the biggest crisis facing the
nation, with only half-baked Abe-led reforms being
introduced to cope with a future “hollowed out”
workforce and rocketing social security costs that
threaten to irrevocably reshape Japan’s economic
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