Economy Declines Again

Cabinet Office released on Monday gross domestic products of Japan in the second quarter of this year, which marked the first decline of economic growth in these three quarters. Although Prime Minister Shinzo Abe has been enthusiastic in asking business leaders to raise salaries of their workers, personal consumption has not shown fundamentally positive response. Abenomics has still not reached the ambitious goal of revitalizing Japanese economy.

Real GDP of Japan between April and June was dropped by 0.4%, compared with the previous quarter, with annualized decline of 1.6%. Personal consumption was reduced by 0.8%, marking an end in eventual recovery after introducing new consumption tax rate of 8% in April last year. Cabinet Office thinks that unstable weather and commodity price hike affected consumers’ mind for purchase. But, eventual shrink of foreign economy also had negative impact on Japanese exports, marking new decline. In addition, asset investment of corporations had also dropped.

Minister for Economic Revitalization, Akira Amari, is still holding positive perspective in future economy. “Although I wouldn’t say it to be whole, I think temporary elements greatly affected,” said Amari, raising less consumption in summer clothes and ‘white-color’ appliances such as air conditioner, caused by bad whether, or negative impact of tax hike on light cars. Amari expected certain recovery in next quarter. But this guy has rarely announced negative information about Japanese economy.

Is it really a matter of temporary phenomenon affected by whether or taxation on a kind of automobile? “It is necessary to connect historically high corporate earnings with higher wage or asset investment,” told Amari asking more effort to business leaders. That was a sort of evidence that Abe administration has not satisfied with current situation of consumers or corporations.

One cannot ignore that the decline in economic statistics stemmed from fundamental concern of consumers or business leaders on uncertainty of their future. Even how consumers feel comfortable with temporary hike in monthly salary or bonus, new consumption tax rate of 10% is waiting for them two years later. There are a number of negative elements outside Japan, including speed-down of Chinese economy or unstable situation in Europe or Middle East.

When Japanese economy shows fundamental slump in the future, wrong distribution of wealth caused by Abenomics will be a great problem Japan will have to deal with. Devoted in historical revisionism or unnecessary reinterpretation of constitution, politics has found no remedy.