Japan’s Weak Q2 Could’ve Been So Much Worse

PM Shinzo AbeThe land of the rising sun — which controls the majority of the automotive industry, machining technologies, electronic and medical equipment, and steelworks among others—has underperformed in the Q2.

According to BBC news, “Gross domestic product grew at an annualised rate of 0.2% in the three months to June, below market forecasts for 0.7% and a marked slowdown from the 2% rate in the first quarter.”

Despite the Prime Minister’s aggressive catalyzing asset-purchase programs, the key readings of the government GDP against GNP dropped by 0.3% share index (Nikkei 225). Japan’s figure for the second quarter stands at ¥28 trillion ($265bn; £200bn).

Export Trends and Contribution

Despite the recent 0.5% missed target, Japan is still the second-largest market in Asia.

The World’s Top Exports reports, “exports from Japan amounted to US$625.1 billion in 2015, down -25.1% since 2011 with a -9.5% decline from 2014 to 2015. Japan’s top 10 exports accounted for 77.5% of the overall value of its global shipments.”

The highest Japanese goods in dollar value comparison include:

1. Vehicles: US$134 billion (21.4% of total exports)
2. Machines, engines, pumps: $117.7 billion (18.8%)
3. Electronic equipment: $95.6 billion (15.3%)
4. Medical, technical equipment: $35.7 billion (5.7%)
5. Iron and steel: $27.5 billion (4.4%)
6. Plastics: $22.5 billion (3.6%)
7. Organic chemicals: $17.9 billion (2.9%)
8. Ships, boats: $11.4 billion (1.8%)
9. Oil: $11.4 billion (1.8%)
10. Rubber: $10.3 billion (1.6%)
11. Slow yet Sustainable Development

Any more underperformance in the Japanese economy would’ve been harmful to the rest of the world. According to Timothy Graf of the State Street Global Markets, “Japan’s growth figures could have been a lot worse. There are worries building over slowing domestic consumption, capital expenditure and the potential for weaker net exports thanks to a stronger yen.”

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The decline of domestic consumerism in the country has been influenced by the strict requirements of Japanese financial institutions. “It still keeps markets focused on whether the Bank of Japan will ease policy later this year, but there may be some sense of relief that the current growth slowdown is not more aggressive,” Graf added.

The PM’s “Wave of Stimulus”

Prime Minister, Shinzo Abe has been trying to end the extreme deflation in the country for almost two decades now. But, none of his policies and executions is working.

The goal of “Abenomics” is to revive the fundamental sense of the economy of Japan, but knowing how deeply entrenched Japan is with both its culture and the global trends, it would be hard to see any actual progress soon.