Tuesday, November 01, 2005

Japan Economy Outlook : Recovery to Last Through 2012

A few excellent articles on Japan’s recovery :

Jesper Koll (Chief economist, Merrill Lynch Japan): Japan has successfully worked off its post-Bubble excess debt, excess capacity, and excess unemployment. Labor costs are falling, and structural inefficiencies have been effectively diminished, allowing for increased productivity. The chances of Japan re-emerging as a high-growth industrial powerhouse are very high. (See also this summary by the Japan Stock Blog; Full article)

Yuji Shimanaka (Chief economist, UFJ Institute) : Economic indicators, in particular that for firms’ capital investment, show that Japan has started a phase of recovery, with the next peak of the cycle in 2010. Land prices will probably start growing again nationwide in 2006. In contrast, the US housing bubble has started to burst, indicating that its economy will peak in 2007 and enter into a recession that will last until 2012. (Full article, in Japanese)

Nobuyuki Saji (Chief economist, Mizuho Securities) : The Japanese economy will definitely remain on a recovery track through 2013. Over the next eight years, the economy will maintain an annual growth rate of 2.5-3% in real terms, though it will likely go through correction phases. Corporate capital spending will initially serve as the main driving force. (Full article)

Worth mentioning here is Mr Saji’s opinion that the decrease in the labor force will actually boost corporate spending, and the generational shift will boost consumer spending (paraphrased below):
The retirement of baby boomers in large numbers, due to take place in 2008 and 2009, will cause a shortage of skilled labor; however, this will prod manufacturers into accelerating factory automation investments through 2007.
From 2008 onward, consumer spending will pick up steam again, because the children of the baby boomers will enter their 40s and become able to spend more money on culture and leisure. As the ratio of unmarried people in their 40s will be higher than now, their consumption on activities such as trips, sports and cultural involvement, which they often enjoy with their friends, will increase. The ratio of working women will grow to about 72%, a figure on par with the U.S. level, and will continue to stimulate consumption.
Therefore, the nation's overall consumption expenditure seems likely to continue growing at an annual rate of over 3% through 2013.

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日本経済 予測


At 8:29 PM, Blogger Taro Akasaka said...

Robert Feldman of Morgan Stanley says in a recent article that attractive plays on the rising economy could be found in IT-enabled machinery, education, and agriculture.
See http://jrearticles.blogspot.com/2005/11/japan-participation-nightmarecapex.html


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