Elliot & Associates Research Global Markets: Japan in technical recession
Japan's economy surprisingly shrank this quarter instead of getting revived, prompting a delay in the country's tax hike and a possible snap election.
Japan's gross domestic product (GDP) fell 1.6% in the July-September period, even with predictions of a rise. The previous quarter marked a 7% contraction which was the most drastic fall since 2011.
Surprisingly enough, all 18 economists consulted by Elliot & Associates Research Global Markets predicted a contraction as the average forecast was an expansion of 2%.
Its economy's current state has met one definition of an economy in recession, which is 2 successive quarterly contractions. According to a senior economist, Glenn Levine, "The Japanese economy is in recession and has now contracted in three of the last four quarters."
Prime Minister Shinzo Abe announced, "GDP figures for July-September turned out not so encouraging. We are seizing a chance to exit long-lasting deflation and we cannot miss that chance."
Experts are predicting that with the economy in such a state, the tax raise which was meant to fill in the nation's public debt will be postponed. Abe's popularity may have suffered since his election but this could change if he would publicly oppose the tax increase.
Abe is now expected to delay the increase until late 2015 and then call a snap election in December aiming to keep the 'Abenomics' going. Consumer spending accounts for around 60% of the economy so it would make sense to delay yet another sales tax increase from the recent 8% to the planned 10%.
According to an analyst from Elliot & Associates Research Global Markets, the "likely course is a snap election in December in which voters obviously choose to delay the tax increase."
This comes after Abe' promise last year to revive Japan's economy with an ambitious strategy which was dubbed 'Abenomics' -- spending and reforms plus a huge monetary stimulus. It aims to help the country recover from 2 decades of deflation onto a growth trajectory. The Bank of Japan promptly went on a big spree and printed billions of dollars to purchase government bonds.
What happened then? Well for one it decreased the value of yen, and made their exports cheaper as a result. For another, it nudged investors from bonds to stocks. Tokyo's stok market skyrocketed and everything seemed to be going very well. Then earlier this year, the government took the risk of increasing consumption tax from 5% to 8%, a first in 20 years. They gave it a shot seeing that the economy is now growing. Unfortunately, the gamble did not pay off. Consumers have practically stopped spending and now their economy is in technical recession.
Looks like the soaring stock market only helped the already wealthy people (only 20% of the Japanese are in the stock market). The expected general increase of salary did not happen while the increase in prices did.
for d 3rd largest economy in the world, this is pretty confusing o.0
that's just because of their very bad public debt
Does this affect manga prices in any way?
i don't see why they have to zero in on Abe (their prime minister) as if he's the only one responsible for this and will be able to solve this on his own..
the same way we always blame Obama for anything bad bro
please don't tell me we're somehow going to bail another country out
Japanese Shocking Recession Should Freak You Out (Originally Posted: 11/19/2014)
Japans Prime Minister Shinzo Abe has had his country printing more money than the Federal Reserve. In fact, the amount they have printed has made the Federal Reserve look like they barely print at all. Japan did this all to try and stimulate their economy through consumer spending. How? Let me explain. The idea of global Federal Reserve banks has been to create inflation. By creating inflation you increase prices. If the consumer knows that prices will be higher in the future, they will buy today. That is the theory at least...
Just days ago, Japan announced that instead of over 2% growth, their economy had shrunk by over 1%. This was a shock and should truly freak you the f^*k out. If the country that printed more money than anyone else just slipped into recession, what chance does Europe or the United States have? To take it a step even further, if printing that much money did not stimulate continued long term growth, does printing money even work? That may be the bigger thing to freak out about. Has the global Federal Reserve policy of printing money done anything but set us up for a major catastrophe. Time will tell and unfortunately, we all will find out and suffer the consequences if their 'theories' were wrong.
Gareth Soloway InTheMoneyStocks
Bro,I think you're forgetting some things.Unlike many economic powers,Japan does not HAVE natural resources and from what I recall before abenomics their economy was heavily deflated. So relax and let the market do its thing.
Japan has more serious systemic problems than the US and they've been a bit of a train wreck for over 20 years now.
Quis explicabo tempora ducimus quisquam error cupiditate ratione. Aspernatur qui numquam beatae voluptas. Enim deserunt est ut ullam et quasi deleniti. Totam perspiciatis ullam culpa commodi et fugit sapiente.
Sit qui tempore iure vel repellendus ratione tenetur. Omnis maiores a molestiae sint. Commodi nihil a delectus eum. Id quam provident enim.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...