Japan Economy Watch

Japan Economy Watch Substack provides analysis on Japan's economic landscape, highlighting issues like wage stagnation, currency valuation, and economic policy. It explores international trade, comparisons with other economies, and the impact of technology on growth. Discussions also extend to global economic trends, environmental debates, and the dynamics of innovation in Japan.

Japan's Economic Policy Currency Valuation and Trade Wage Stagnation International Trade and Competitiveness Innovation and Entrepreneurship Environmental Policy and Climate Change Technological Advancements Global Economic Trends Corporate Practices and Taxation Monetary Policy and Interest Rates

The hottest Substack posts of Japan Economy Watch

And their main takeaways

Japan’s Declining Commercial Innovation, Part I

179 implied HN points • 05 Jun 24
💼 Business Innovation Science Funding
  1. Japan has experienced a decline in commercial innovation since the 21st century, with its share of important patents decreasing, putting it at risk of falling in global rankings
  2. There is a debate on the reasons behind Japan's innovation decline, with one side focusing on the lack of new breakthroughs in basic science and the other on corporations' inefficiency in utilizing scientific advances
  3. Japan faces challenges in funding and supporting PhD programs, leading to a decrease in the number of PhDs produced, impacting the country's scientific output and innovation potential

Japan’s Technological Prowess Should Enable 2.3% Per Capita Growth, Part I

299 implied HN points • 13 May 24
💼 Business Technology Economic Growth Innovation Competitiveness Research & Development
  1. Japan's technological prowess could potentially lead to 2.3% per capita growth, doubling the current rate.
  2. The challenge Japan faces is converting technological strength into economic value due to rigid financial and labor systems.
  3. While Japan excels in complexity of technology use, it lags in adapting new technologies and faces challenges in sustaining growth as demand shifts.

GDP: Six Years of Zero Growth

199 implied HN points • 16 May 24
💰 Finance Economy Government spending Interest Rates
  1. Japanese GDP has experienced zero growth in the past six years, with household consumption and business investment showing no positive change.
  2. Government spending hikes have prevented a worse decline in GDP, increasing by 8% from 2018.
  3. Despite a significant depreciation of the yen, exports have only increased by 4% over six years, indicating modest growth.

Don’t Panic About A Yen “Free Fall”

239 implied HN points • 01 May 24
💰 Finance Currency Economy Trade Intervention Exports
  1. The danger is not a sudden financial crisis, but rather slow erosion of Japan's economic competitiveness and living standards.
  2. The yen's recent fluctuations do not indicate a free fall, but rather show volatility in the currency market.
  3. Japan has the resources to prevent a currency free fall and stabilize the yen value through interventions and its international assets.

The Houthis, A Disappointing Wage Report, and the Tumbling Yen

1098 implied HN points • 17 Jan 24
💰 Finance Markets Interest Rates Inflation Economy Wages
  1. The yen has weakened due to external factors like the Houthi attack, impacting Japanese economy and inflation, and market anticipation of interest rate changes. The disappointing wage report for November dampened expectations for a rise in interest rates by the Bank of Japan, leading to a weaker yen.
  2. An accurate model for predicting the yen's strength has a standard error of about 3.4 yen. A sizeable discrepancy between the model's forecast and the actual yen value could either indicate a correction back to expected levels or suggest a long-term trend change.
  3. The growth in nominal wages in Japan has consistently fallen short of the 3% goal needed for sustained inflation. This has influenced market expectations regarding the Bank of Japan's monetary policy decisions and consequently impacted the yen's valuation.
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Forbes Asia, Asia Times Reviews of My New Book

1078 implied HN points • 18 Jan 24
💼 Business Entrepreneurship Economy Book review
  1. Japan has a significant opportunity for economic growth through entrepreneurship and innovation, with potential for a tectonic shift in civil society.
  2. Richard Katz's new book highlights the importance of Japan seizing the chance to revitalize its economy by generating innovative companies and above-par growth.
  3. Key megatrends like generational shifts, technological advancements, and political stresses are identified as factors that could reshape Japan's economic future according to Katz.

BOJ Stands Pat; Yen Weakens to ¥158; Inflation Substantially Below 2% Goal

159 implied HN points • 27 Apr 24
💰 Finance Inflation Central Bank Interest Rates Currency Exchange Economic outlook
  1. Bank of Japan (BOJ) announced no new tightening measures, leading to yen weakening to ¥158/$
  2. Inflation in Japan has fallen substantially below the 2% goal, with core inflation hitting 1.4% in the past six months
  3. BOJ remains optimistic about reaching stable 2% inflation, emphasizing on a 'virtuous cycle' between wages and prices

Econvue Podcast on My Book And Other Japan-Related Topics

179 implied HN points • 22 Apr 24
🎙 Podcasts Interview Japan Entrepreneurship Economy Innovation
  1. The podcast discusses the author's interest in Japan, the reasons behind writing the book, and the experience of writing it, along with gratifying responses from Japanese and foreigners.
  2. Main messages from the book highlight the need for entrepreneurship in Japan's economic recovery and the potential for reform due to social and technological changes.
  3. The podcast covers various topics such as defense spending's impact on innovation, Japan's shortage of digital professionals, and the message to younger Japanese about creating societal change.

Market Misreads Services Inflation And the BOJ

1018 implied HN points • 04 Jan 24
💰 Finance Market Analysis Inflation Central Banks Economic data Monetary Policy
  1. Market players and forecasters may be misreading the intentions of the Bank of Japan (BOJ) about inflation and wage data.
  2. The BOJ's ambiguous messages and contradictory statements are causing confusion in the market.
  3. Evaluating services inflation and wage hikes requires careful consideration of data and not jumping to conclusions.

Would Yen Intervention Succeed?

179 implied HN points • 15 Apr 24
💰 Finance Intervention Interest Rates
  1. The effectiveness of yen intervention by the Ministry of Finance is uncertain, based on past attempts and the influence of interest rate gaps.
  2. The weakened yen might not necessarily be due to unwarranted speculation, but rather a reflection of long-term weakening of the Japanese economy.
  3. The Bank of Japan's actions, like increasing interest rates, could have a more significant impact on the yen's value than direct interventions by the Ministry of Finance.

BOJ Finally Pulls the Trigger on Rate Policy, But It’s a Low-Caliber Gun

259 implied HN points • 20 Mar 24
💰 Finance Monetary Policy Interest Rates Inflation Currency Exchange
  1. BOJ's interest rate policy tweak is more about changing the mechanism to keep rates low, gradually raising overnight rates from negative to low positive percentages over time.
  2. Ending Yield Curve Control means BOJ stops directly controlling long-term rates but still aims to keep them low by continuing to buy the same amount of long-term bonds.
  3. BOJ remains focused on low inflation and plans to raise interest rates if it rises too high, but for now, it sees current inflation as temporary due to global factors.

"Pivot Global" Interview Video

159 implied HN points • 08 Apr 24
💼 Business Entrepreneurship Economy Stock Market Corporate strategy Innovation
  1. The interview covers various topics such as the state of Japan's economy, stock market, wages, and strategies of niche companies
  2. There is discussion on the importance of new entrepreneurs in driving positive social changes in Japan
  3. The interview highlights the potential for Japan's economic recovery through embracing innovation, new companies, and adapting to changing business dynamics

Generational Change, Technology, and Japan’s New Opportunity For Recovery

259 implied HN points • 03 Mar 24
💼 Business Technology Entrepreneurship Financial Institutions Globalization
  1. Generational changes and technological advancements in Japan are creating new opportunities for the country's recovery.
  2. Attitudes towards entrepreneurship among younger generations are shifting positively, promoting more innovation and business creation.
  3. Japan has the potential to revive rapid economic growth through entrepreneurship, drawing from historical success during the Meiji Era and post-WWII period.

Germany Surpasses Japan At #3 Nominal GDP Spot

319 implied HN points • 17 Feb 24
💰 Finance Economy GDP Currency Population Competitiveness
  1. The reversal of rank in GDP between Germany and Japan is largely due to currency fluctuations, rather than significant changes in real GDP, population, or workforce size.
  2. Purchasing Power Parity (PPP) offers a more accurate comparison of economic power by adjusting for currency exchange rate differences.
  3. Japan's slower growth in comparison to Germany is influenced by changes in population size, with significant implications for economic performance and global influence.

Why Did The BOJ Move Despite Conflicting Evidence on Wages and Prices?

179 implied HN points • 21 Mar 24
💰 Finance Economy Banking Inflation Monetary Policy Wages
  1. The Bank of Japan's decision to make monetary policy changes despite unclear wage and price trends was questioned.
  2. There was no immediate financial market pressure on the BOJ to act, as rates were stable and not pushing past set levels.
  3. Conflicting data on wage trends created uncertainty, with various databases showing contradictory evidence, making predictions difficult.

Shunto: Why 4-5% Headline Wage Hike Really Means 2-3%

179 implied HN points • 13 Mar 24
💼 Business Economics Labor
  1. Headline wage hikes in Japan may seem high, like 4-5%, but they often translate to 2-3% for the entire labor force.
  2. The base pay increase is what directly impacts overall income, while seniority raises have a more limited effect.
  3. Despite the impressive headline numbers, real wages in Japan have fallen due to inflation, with expectations for minimal improvements in the near future.

Stock Rally Does NOT Mean “Japan Is Back”

339 implied HN points • 28 Jan 24
💰 Finance Stock Market
  1. A stock rally in Japan does not necessarily indicate the country's economic resurgence.
  2. Stock prices in Japan have been influenced by wage cuts and extensive stock buybacks.
  3. Company profits in Japan have grown despite stagnant wages, and stock buybacks are being used to artificially raise stock prices.

Myth: Japanese Are Only Good At Incremental Innovation

3 HN points • 15 Jun 24
💼 Business Innovation Corporate strategy Technology
  1. Japanese companies have a history of pioneering new technologies and products, disproving the myth that they are only good at incremental innovation.
  2. Disparaging improvements as 'merely' incremental overlooks how incremental advancements can lead to transformative breakthroughs over time, like the evolution of the lithium-ion battery.
  3. Technological innovation must be coupled with effective corporate strategy and execution to maximize economic impact, as seen in the case of Nissan and Tesla's different outcomes in the EV market.

How Much Change When BOJ Eventually Tweaks? Part 1

139 implied HN points • 11 Mar 24
💰 Finance Monetary Policy Economic conditions Interest Rates Central Banking Inflation
  1. Interest rate changes depend on both BOJ policy and financial market conditions, and a policy tweak is likely to result in a gradual, minor impact on rates.
  2. BOJ's intention appears to be maintaining accommodative financial conditions by making small adjustments to policies like the overnight rate and yield curve control.
  3. BOJ's decision-making process is influenced by the balance of risks in moving too early or too late, with a focus on clear evidence of sustained wage growth before significant policy changes.

Substackers Against Nazis

399 implied HN points • 16 Dec 23
🇺🇸 U.S. Politics Extremism Content Moderation
  1. The Substack platform is being criticized for allowing the platforming and monetization of Nazis and white nationalists, which has caused concern among subscribers.
  2. Many prominent Substack writers have left or threatened to leave due to Substack's inability to adequately address the issue of allowing white nationalism on the platform.
  3. Subscribers and publishers are calling on Substack to clarify their stance on platforming Nazis and to reconsider their position on allowing such content to be monetized.

Hope For A Deal between Nippon Steel and the Steelworkers Union Before Election Day

159 implied HN points • 27 Feb 24
🇺🇸 U.S. Politics Election National Security Legislation Foreign Relations Trade
  1. There is hope for a deal between Nippon Steel and the Steelworkers Union before Election Day to avoid national security issues and ease political tensions.
  2. Election year politics heavily influence decisions, with implications for US-Japan relations and national security.
  3. Challenges exist in making the deal, including union concerns about potential job losses and the need for guarantees, but both sides are working towards a resolution.

Koll Vs. Katz On Japan’s Economic Trajectory

159 implied HN points • 21 Feb 24
🌍 World Politics Reform
  1. There is a debate between Koll and Katz about Japan's economic trajectory and the need for reform.
  2. Koll believes Japan has already reformed, particularly in big companies, while Katz thinks more reform is necessary to further improve Japan's economic situation.
  3. Optimism and entrepreneurship are key in identifying problems and finding solutions for Japan's economic future.

Biden Statement On Nippon Steel Does Not Preclude Merger

79 implied HN points • 01 Apr 24
🇺🇸 U.S. Politics Elections Foreign Relations Trade Regulations Antitrust
  1. President Biden's statement opposing Nippon Steel's purchase of US Steel does not completely prevent the merger, as negotiations are ongoing.
  2. The Steelworkers Union and Nippon Steel are in arduous negotiations to reach an agreement that satisfies the union's conditions before the merger can proceed.
  3. If the Nippon Steel merger with US Steel fails, there are challenges for the union as there isn't another American company that can buy USS, potentially impacting union-management relations and financial stability.

Japan’s Yo-Yo GDP

399 implied HN points • 19 Nov 23
💼 Business Economy Stock Market Wages GDP
  1. Japan's GDP has not seen growth in five years, raising concerns about the country's economic health.
  2. Majority of the recent GDP growth in Japan is attributed to increased government spending.
  3. Real wages in Japan have been declining, impacting employee compensation and consumption, which further influences Bank of Japan policy and the value of the yen.

How Low Wages Made Japan A Deficit Addict

339 implied HN points • 07 Dec 23
💰 Finance Economy Government Income Investment Taxation
  1. Low wages in Japan lead to decreased consumer purchasing power, causing a need for government intervention through deficit spending.
  2. Household income in Japan has been declining over the years, affecting consumer spending and economic growth.
  3. Government deficits in Japan are used to finance consumer spending and support the economy due to stagnant wages and decreased savings.

Is Aging Behind Japan’s Drop in Consumer Spending?

339 implied HN points • 01 Dec 23
💰 Finance Consumer spending Aging Income Savings Healthcare
  1. Aging is not the main reason for Japan's declining consumption, which is partly due to a decrease in the number of people and stagnant or falling income.
  2. Spending per capita dropped 1.3% from 2012 to 2022 despite an increase in GDP, indicating a complex mix of factors contributing to the decline.
  3. Economies of scale play a significant role in the spending habits of seniors, who end up spending about 7% more per person compared to younger households.

Yen’s Short-Term Fluctuations and Long-Term Weakness

299 implied HN points • 14 Dec 23
💰 Finance Currency Economy Inflation Interest Rates Trade
  1. Short-term fluctuations of the yen depend on interest rate gaps between Japan and the US, influencing investors to buy/sell yen.
  2. Long-term weakness of the yen is influenced by the competitiveness of Japanese exports, affecting the overall value of the yen.
  3. The purchasing power of the yen relative to its trading partners has decreased significantly over the past 50 years, impacting Japanese households and companies.

Endorsements for My Book From Heizo Takenaka and Other Notables

219 implied HN points • 20 Dec 23
💼 Business Entrepreneurship Publications
  1. The author's book on reviving entrepreneurship in Japan has received noteworthy endorsements from Heizo Takenaka, Gerald Curtis, Bill Emmott, Zoltan Acs, and David Audretsch, all experts in economics and politics.
  2. The endorsements highlight the potential for Japan to experience an entrepreneurial renaissance fueled by factors like digital technology, demographic changes, and government support.
  3. The book challenges the traditional belief that Japan lacks entrepreneurship, providing a fresh analysis that argues for the importance of fostering new companies.

Foreign Affairs Runs Precis of My Book

139 implied HN points • 31 Jan 24
🌍 World Politics Global Economy Japan Entrepreneurship Economic Growth Globalization
  1. Japan's economic slump is not irreversible, and there is potential for recovery with shifts in attitudes, technology, and globalization.
  2. Despite Japan's structural flaws, South Korea's economic success shows that fixing the Japanese economy is achievable.
  3. The article in Foreign Affairs discusses the potential for Japan to revive entrepreneurial spirit for economic growth.

Unpopular Kishida Could Be On Way Out Soon

259 implied HN points • 20 Nov 23
🌍 World Politics Japan
  1. Japan's Prime Minister Kishida's approval rating has dropped to 21%, a historically low point that often precedes resignation.
  2. Support for the ruling party, LDP, also fell to 19.1%, indicating a significant loss of public trust.
  3. The decline in approval ratings is attributed to Kishida's lack of action despite making promises, with growing dissatisfaction among voters due to unmet expectations.

30% Off For My Book on Japan Entrepreneurship

239 implied HN points • 10 Nov 23
📚 Literature Entrepreneurship Japan Technological Change
  1. The book is about reviving entrepreneurship in Japan and offers a 30% discount on the hardcover edition for pre-orders.
  2. Pre-orders are important for marketing efforts and a bigger print run. Ordering from Oxford's global site provides the discount.
  3. The book covers various topics like technological change, gender relations, and the need for entrepreneurial growth to improve Japan's economy.

Video of My Talk and Q&A on Japan Zoominar

99 implied HN points • 05 Feb 24
🌐 International Japan Economy Author Book launch Dialogue
  1. Richard Katz participated in a lively dialogue about his new book on Japan's economic future during the Japan Zoominar.
  2. Questions from the audience were diverse and engaging, sparking interesting discussions.
  3. Katz will provide answers to more audience questions in a future post and will speak at the Tokyo campus of Temple University on Feb. 8th.

Trade Surplus Provided All of Japan’s GDP Growth in 2nd Quarter

399 implied HN points • 17 Aug 23
💰 Finance Economy Trade GDP Consumption Investment
  1. Japan's GDP growth in the 2nd quarter was entirely due to the trade surplus, not internal economic factors like consumption or business investment.
  2. Consumption in Japan shrank, and private demand decreased, highlighting the reliance on trade for economic growth.
  3. Real employee compensation in Japan is stagnant and even lower than pre-Covid levels, raising concerns about overall economic health and consumer spending.

Xi Jinping Seeks To Ban “Socialism with Japanese and Singaporean characteristics,” Part I

319 implied HN points • 20 Sep 23
🌍 World Politics Economic Policy Foreign Relations
  1. Deng Xiaoping sought advice from Japan and Singapore to help China's economic miracle by focusing on export-led industrialization and attracting foreign companies for modern industries.
  2. Japan demonstrated the effectiveness of industrial policy to upgrade industries quickly and the importance of combining state action with market discipline to avoid economic pitfalls.
  3. China leveraged exports and foreign companies, following the examples of Singapore and Japan, to grow its economy, create higher-tech exports, and improve living standards.

Did Wages Really Rise The Fastest In 28 Years?

439 implied HN points • 09 Jul 23
💰 Finance Wages Inflation Economic Theory Consumer spending
  1. Wages per hour, not per month, need to be examined to truly understand wage growth
  2. The data showing nominal wages growth doesn't necessarily reflect a true increase in pay, as it may be influenced by other factors like scheduled hours of work
  3. The focus on nominal wages by the Bank of Japan is aimed at achieving a specific inflation target, which may not fully account for the real impact on consumers

From Fetish To Fetter: China's Model Of Investment-Led Growth

299 implied HN points • 12 Sep 23
🌍 World Politics China Economy Growth Investment Consumption
  1. China's investment-led growth model is facing challenges, with excessive investment and unproductive spending impacting the economy.
  2. China needs to transition from more investment to smarter investment to sustain economic growth and improve living standards.
  3. The country's focus on high investment levels has led to weakening consumer demand, limited household income, and a growing debt burden.

Japan Is Joining “De-Risk From China” Coalition

259 implied HN points • 03 Oct 23
🌍 World Politics Geopolitics Foreign Relations Economic Policies Global Trade International cooperation
  1. Japan is aligning with American and European entities in a 'De-Risking' strategy towards China, aiming to avoid extreme outcomes like 'decoupling'
  2. Although complete 'decoupling' with China is not desired due to global interdependence, there is a shift towards 'de-risking' by foreign companies and governments
  3. China's actions are alienating foreign companies and impacting productivity growth, urging a balance between economic independence and international engagement

How China’s Troubles Could Hurt Japan

239 implied HN points • 11 Oct 23
🌍 World Politics International relations Economic Impact Global Trade
  1. China's economic troubles could potentially send Japan into a mild recession by impacting its exports and GDP growth.
  2. The ongoing techno-war between China and the West is affecting economic growth for all nations, with Japan already experiencing a slowdown in foreign direct investment into China.
  3. Japanese companies are facing challenges like corporate espionage, reduced global sales, and the need to diversify their operations away from China due to economic and geopolitical tensions.