Japan’s economic splutter in the first quarter bodes ill for Prime Minister Abe

Japan’s economic splutter in the first quarter bodes ill for Prime Minister Abe

Noriko Watanabe and Sawako Uchida

Modern Tokyo Times

Prime Minister Shinzo Abe of Japan needs some good news because of the recent political climate in this nation. However, the first economic splutter in two years during the first quarter of 2018 sums up recent events.

Once more, private consumption dragged the economy down after two years of positive economic data. Equally, capital expenditure played a part in the contraction of 0.6%. Hence, with the political heat still being on Abe – and recent foreign policy objectives appearing negative in relation to the trip to America, being left out of important developments on the Korean Peninsula, and upsetting the Russian Federation – then the negative economic news is the last thing the prime minister wanted.

The BBC reports, “Private consumption accounts for about 60% of Japan’s economic activity, but the country also relies on its exports of electronics, among other products, to fuel its economy.”

Lee Jay Walker at Modern Tokyo Times, says “In truth, the last quarter of 2017 indicated that a blip was expected in Japan. On top of this, you currently have an electronics slowdown internationally. At the same time, economic issues related to tariffs and a possible trade war based on the policy objectives of President Trump in America equates to uncertainty.”

Despite everything, analysts, on the whole, believe that Japan’s economy will pick up gradually in 2018 based on internal factors and external factors. This relates to the yen rate in relation to the dollar and the knock-on effects for Japanese exports. Equally, despite the threat of a trade war between America and China, on the whole, the international economic outlook looks rosy. However, the possibility of another contraction could happen in the second quarter – analysts are divided on this issue because some individuals are positive – in relation to corporations in Japan pulling back on their respective capital expenditure.

Therefore, with the yen remaining high and with analysts being divided, then the picture remains mixed. This bodes ill for Abe because he needs positive economic news to boost his domestic standings.


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