Japan's economy grew at a much slower speed than expected at the end of last year and this challenged policymakers in Japan to accelerate in consumption and exports to boost Japanese economy. Japan grew 0.3 percent in the fourth quarter and this value is well below the median estimate for a 0.7 percent increase. Many economists expect that growth will accelerate in the current quarter as shoppers buy more goods before the tax hike. But, what's more worrying is sluggish exports despite long-expected impact of a weak yen on boosting external demand. Export growth has remained sluggish over recent quarters, partly reflecting softer demand in Asian markets though some of it also underlined the shift by Japanese companies of their manufacturing plants to offshore centers.
3 comments:
Interesting article you have found. It is not surprising that Japanese have moved a lot of their production off shores so as to increase exports. I would tend to wonder if the quality of product is compromised at all, and could lead to Japan having less success with their exports.
From lecture on Japan the other day, I recall Japanese labor market being very inflexible. While companies can gain benefit from having employees who are loyal, committed and experienced, firms can also lose profits as they are restrained from taking steps that involve making dramatic changes in the organization system, or laying employees, especially senior members who may not be as productive and energetic as the young ones. Therefore, Japanese companies moving off-shore might give them more flexibility, better innovation and higher efficiency.
It would be interesting to see how Japanese companies adapt to the new environment since it is completely different from what they used to do domestically. Personally, I don't think going off-shore will do much for Japanese economy. The domestic market is running at a very slow pace (saving rate is high even though interest rate is ~0%), people have no desire to spend. Hence, the consumption hurts probably too bad for export to compensate. It is a culture thing but a developed country will hardly maintain its position if consumption falls that low.
Post a Comment