Expecting Further Growth

While actual value of wage has not significantly been upraised, business leaders expect stable growth of Japanese economy this year. Tokyo Stock Exchange rallied based on that kind of expectation on the first trading day of this year on Thursday. Prime Minister Shinzo Abe demanded the leaders to raise workers’ wage by 3% as compensation with his economic policy preferable to major corporations. Positive cycle of economic growth, which has been the goal of Abenomics, has not been achieved yet.

Nikkei Average at the end of the first trading day marked ¥23,506, ¥741.39 higher than the price of final trading of last year on December 29. Direct element of the rally was that positive situation of American economy had been endorsed by some economic indexes, which was announced at the beginning of this year. Dow Jones Industrial Average in New York Stock Exchange, which represents major corporations in United States, marked the new high on Wednesday. In Tokyo, stock price of 80% of all brands, mainly electric appliances, banks or petroleum business with rally of future crude oil price, was raised.

Analysts in Japan expects Nikkei Average as high as ¥25,000 at the end of this year. One trader in Nomura Securities expected ¥27,000 in the summer, based on his prospect of positive impact of low interest policy of Bank of Japan. Another trader in SMBC Nikko Securities speculated further growth of world economy, contributing to preferable environment of each business.

The negative element was volatility of United States of President Donald Trump. One analyst with Sumitomo Mitsui Banking Corporation indicated a possibility that Trump administration would take a policy for low-valued US dollar to raise supporting rate of his administration before mid-term election of US Congress this fall. Deterioration of security situation in North Korea or Middle East may affect stock prices negatively.

Frustrated with a fact that economic situation had not contributed to higher supporting rate of his administration, Prime Minister Abe requested three major business organizations, Japan Business Federation, Japan Chamber of Commerce and Industry and Japan Association of Corporate Executives, 3% growth of worker’s wage this year. “For an active company that boldly invest to the future, we decided to cut corporate tax as low as 20%, which has to be taken advantage of,” told Abe in the new year reception.

Top leaders of those organizations are basically positive for raising wage. “We want to contribute to getting rid of deflation and positive economic cycle,” told JBF Chairman Sadayuki Sakakibara. However, even Prime Minister or JBF Chairman cannot control management of each private business. There will be no employer who unreasonably raise workers’ wage, because Head of JCCI, Akio Mimura, has said “A manager has to feel embarrassed with accumulation of internal reserves.” Authoritarian outcome from liberal economy cannot be expected.