World Economy

Japan Economic Assessment Unchanged

Japan Economic Assessment UnchangedJapan Economic Assessment Unchanged

Japan’s government kept its economic assessment unchanged in December after revised data showed the economy dodged a technical recession in the last quarter due to gains in capital expenditure.

The government also stood by its assessment that consumer spending is holding steady and that corporate profits are improving due to strengthening domestic demand, Reuters reported.

“The economy is in a gradual recovery trend, but there are some pockets of weakness,” the cabinet office said in its monthly economic report on Monday.

Government maintained its downbeat assessment of exports, saying shipments are weak due to China’s economic slowdown and worries about emerging markets.

Industrial output has weakened recently, unchanged from last month, the government said.

Last week, Prime Minister Shinzo Abe’s government approved a $27 billion stimulus package that will increase cash handouts to pensioners and the agriculture sector to give consumption a boost.

Japan dodged a technical recession after revised data earlier this month showed the economy expanded an annualized 1% in July-September. The initial estimate was that the economy had contracted an annualized 0.8%.

The upward revision was due to gains in capital expenditure, but some economists worry companies could curb business investment next year if China’s economy continues to slow.

White Goods Shipment

Japanese home appliance shipments in November were up for the 7th consecutive month, NHK reported.

The Japan Electrical Manufacturers’ Association says shipments of so-called white goods reached about $1.4 billion last month. That’s up 4.4% in yen terms from last year.

The result is attributed to brisk sales of high-priced sensor-controlled air conditioners as winter arrived. Large washing machines were also in demand, while foreign tourists snapped up high-function rice cookers.

Association officials say they hope shipments will continue rising in the coming months, as workers at big companies get larger bonuses this winter.

   $2.5b Plan

Haruhiko Kuroda has a new plan. He’s going to buy $2.5 billion of something that doesn’t exist.

Markets were roiled Friday after the Bank of Japan unveiled measures including purchasing exchange-traded funds that track companies which are “proactively making investment in physical and human capital.” The central bank will spend 300 billion yen ($2.5 billion) a year from April buying such securities to offset the market impact as it resumes selling stocks purchased earlier from financial institutions.

The only problem is such ETFs have never been made in Japan, at least not yet. Even as fund providers start hundreds of so-called “smart beta” products that choose stocks based on everything from dividends to volatility, ETFs that pick companies for how they deploy their cash are rare in global markets.

“These kinds of ETFs don’t exist now. Using capital spending as a factor in deciding what goes in an ETF is quite unusual,” said Koei Imai, who oversees $25 billion of ETFs at Nikko Asset Management Co. in Tokyo. “I think the message from the BOJ is for us to go out and make them.”