Japan’s once dynamic economy has been stuck in a decades-long slump but economists now think Japan is back

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Japan’s largest bank he was promoted interest rates above zero for the first time in 17 years two weeks ago. It raised interest rates to 0-0.1%, from -0.1%, ending the global interest rate hike. the last ones Interest rates are falling among major economies—and signaling to economists that Japan’s 30-year recession may be over.

Tokiko Shimizu, an assistant governor at the Bank of Japan, is among those who see the end of the worst regime as a sign that Japan is changing – even if the rate of growth is modest by international banking standards.

“The system itself is very small – 10 points,” he said on Wednesday at the Fortune Innovation Forum in Hong Kong. “But it’s a very good part of the Japanese economy.”

For central bankers, the famous role of Japan’s central bank reflects the new situation in the country, with salaries and rates rising after years.

“The reason we decided to change this is because a positive change between wages and value is taking place,” he said, referring to recent wage negotiations between Japanese companies and labor unions. Conversations Led to increase wages by 5.28%, the largest increase in 33 years.

Shimizu said that his colleagues in other G7 and G20 countries are more concerned than the Bank of Japan’s impact on wage growth. Companies raise prices to account for labor costs, increased inflation, and encourage workers to ask for more pay increases later. Economists have attributed this high wage rate to the persistent inflation and economic collapse of the Western world in the 1970s, and fears of a repeat of this trend continue in many countries.

Yet Japan instead has faced an entirely different battle – it has fought to persevere Decades of inflation, resulting in lower prices, stagnant wages and lower asset prices. For Shimizu and his colleagues, the March wage talks suggest that Japan may be seeing a rise in prices.

On Wednesday, Shimizu predicted that an interest rate hike was unlikely. “We expect price movements in the coming years to be around 2%. This means that we do not see a rise in interest rates.” [to be] necessary.”

The subject of inflation hurry up in February 2019 it changed to +2.8%. It is the 23rd month in a row that this number has met or exceeded the 2% rate of the central bank.

Is Japan back?

Japan’s recent interest rate hike is just one part of the larger story of the world’s fourth-largest economy’s recovery. The country’s stock markets have now outperformed documents Back to December 1989, at the height of Japan’s economic boom.

Jesper Koll, board director at the Okinawa Institute for Science and Technology and a former Japan watcher, said on Wednesday the world could turn around.

Koll pointed to the high number of people leaving their jobs as an indication of a tight job market. “Over the last four or five years, this [quit rate] He’s done very well,” Koll said. “The elite, the young, the next generation of Japan is now taking risks,” he continued, with two-thirds of Japan’s youth just starting out.

There are also changes at the top. “If you look at the age of the new CEOs appointed by Japan’s leading companies and listed companies, the age of the CEO has dropped from 69 to 57,” Koll said.

Companies are also investing in Japan. Leading chipmaker Taiwan Semiconductor Manufacturing Company only he opened it factory in Kumamoto Prefecture on the island of Kyushu, which is sometimes called “Silicon Island” in February.

Finally, Koll noted that Japan is becoming an “immigration powerhouse,” with a traditionally closed country attracting more and more immigrants.

“Now there are 3.2 million non-Japanese living in Japan, of which 2.4 million are working. “When I came to Japan in the mid-1980s, there were about 500,000,” said Koll.

Old people

Both Shimizu and Koll cited one major problem facing the Japanese economy: the labor shortage. Japan is one of the oldest countries in the world, and the country’s government has tried, and failed, to raise the fertility rate for over a decade.

This means that Japan must encourage growth with fewer people. For Shimizu, the solution to this problem comes through robots, automation and AI.

“Japanese people like robots, compared to people in the West,” he said, using a toy of Doraemon, Japan’s famous robotic cat, to prove his point. Robots could help Japan encourage more women and the elderly to join the labor market, expanding the country’s workforce, he said.

Koll, on the other hand, sees demographic change as a way to revitalize Japan’s economy.

“Japan is in a sweet spot because one in four is already 70 years old and the baby boomer generation has to die with dignity,” Koll said.

“Now we have a good voice for young people,” he said. “This young generation is now leaving the Ministry of Finance…not to go to Mitsubishi Corporation, but to start a new company.”

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