Uncertainty of Japanese Economy

In his new year press conference, Prime Minister Shinzo Abe defined his top priority in 2017 as economy. However, the substance of his strategy made no difference from what he had been upholding past years: three arrows of monetary policy, fiscal policy and growth strategy. While the corporations in Japan have positive perspectives for this year, it is based on expectation to volatile incoming administration of United States, led by Donald Trump. Future of Japanese economy is too uncertain to tell.

This is Year of the Rooster in Japanese zodiac. Abe reminded of big events in past years of the Rooster, quoting dissolution of House of Representatives for postal reform by Prime Minister Jun-ichiro Koizumi in 2005, breakdown of 1955 Regime with falling down of Liberal Democratic Party to the opposite position in 1993, and dissolution of the House with agreement with U.S. on returning Okinawa by Prime Minister Eisaku Sato in 1969. Having said that, Abe denied his idea of dissolution, insisting on activation of new year budget as the biggest economic policy.

Abe often refers to his economic agenda called One Hundred Millions Engagement, which means all the people can be engaged to the growth of Japanese economy. But even how young mothers want to be engaged and get necessary salary, some of them cannot leave her child, because of scarcity of nursery facilities. Others may be unable to work, because they need to take care of old parents. There was no answer from Abe on how those problems can be solved. His idea still relied on a notion that Japanese economy is ok, if the big companies were growing.

Actually, growing number of those big companies expect this year to be hopeful. In a survey conducted by Mainichi Shimbun, 49 out of 124 major companies recognized Japanese economy as slowly recovering, doubling the number of last survey in last May. Although 74 thought Japanese economy to be on the landing, the number shrank from the last time.

In the opening session of this year in Tokyo Stock Exchange, Nikkei average marked ¥19,594. An expert explained that foreign investors were buying Japanese stocks with expectation of low-valued yen caused by positive tendencies in U.S. economy. However, those excitements did not reflect negative elements of Trump’s protectionism and volatility of European economy and politics.

Negative elements can be seen in the details of Mainichi survey. 21% of the companies denied base-up of employees’ salary and those which would be increasing domestic asset investment were reduced by 14% from last survey. The greatest concern was not Trump or China but sluggish domestic consumption. Abenomics has not trickled down into the ordinary people.