Skip to content
More from
Bloomberg
Opinion
relates to It’s Still a Man’s World at Hyundai
relates to Here’s How the Quants Might Pick NCAA Basketball Winners relates to China’s Electric Cars Hit Some Potholes relates to Xiaomi Should Stop the Spin and Show Off These Numbers relates to Goldilocks Is Getting Chased Out of the Markets relates to Four Non-Trump Problems to Focus the Mind relates to The Models Are Going to Be in Charge relates to China’s Boeing Threat Has More Bite Than Bark relates to Kazakh Strongman Shows Putin a Path for Staying in Power relates to Quants in the Muni Market Show Bond Liquidity Will Be Fine relates to It’s Still a Man’s World at Hyundai
relates to Here’s How the Quants Might Pick NCAA Basketball Winners relates to China’s Electric Cars Hit Some Potholes relates to Xiaomi Should Stop the Spin and Show Off These Numbers relates to Goldilocks Is Getting Chased Out of the Markets relates to Four Non-Trump Problems to Focus the Mind relates to The Models Are Going to Be in Charge relates to China’s Boeing Threat Has More Bite Than Bark relates to Kazakh Strongman Shows Putin a Path for Staying in Power relates to Quants in the Muni Market Show Bond Liquidity Will Be Fine relates to It’s Still a Man’s World at Hyundai
relates to Here’s How the Quants Might Pick NCAA Basketball Winners relates to China’s Electric Cars Hit Some Potholes relates to Xiaomi Should Stop the Spin and Show Off These Numbers relates to Goldilocks Is Getting Chased Out of the Markets relates to Four Non-Trump Problems to Focus the Mind relates to The Models Are Going to Be in Charge relates to China’s Boeing Threat Has More Bite Than Bark relates to Kazakh Strongman Shows Putin a Path for Staying in Power relates to Quants in the Muni Market Show Bond Liquidity Will Be Fine
Economics

Japan’s Economy Isn’t Hopeless

A rebound in fourth-quarter GDP disappoints idealists. The economy is treading water – and that’s pretty good these days.

Japan’s Economy Isn’t Hopeless

A rebound in fourth-quarter GDP disappoints idealists. The economy is treading water – and that’s pretty good these days.

Bright spots.

Bright spots.

Photographer: Tomohiro Ohsumi/Bloomberg
Bright spots.
Photographer: Tomohiro Ohsumi/Bloomberg

Stop seeing Japan as a wasteland.

The country's economy, the world's third largest, still matters.  Japan isn't stuck in a hopeless demographic-driven hole without escape. Rather, the three decades since the Bubble burst have had their ups and downs.

Look at the fourth-quarter gross domestic product numbers published Thursday. They aren't brilliant; they aren't terrible. What makes them interesting is their ordinariness: Most major industrial economies had, at best, a tepid end to 2018. Japan has company.

There’s Germany. Its economy shrank in the third quarter and is likely to turn in a mediocre report card for the fourth term. The U.K. and France are hardly models. China, the world’s darling after its Japan love affair dissolved in the 1990s, is a source of global vulnerability these days, not strength. Outside America, it's looking pretty uninspiring – and even there, things are cooling.

Overall, Japan’s figures show a modest rebound from a contraction in the prior three months, when natural disasters dented activity. Growth was an annualized 1.4 percent, in line with estimates. Yet the components are perhaps more interesting. 

Not a Total Disaster

Japan GDP has had its ups and downs

Source: Cabinet Office

Japan's exports suffered in the fourth quarter, suggesting that trade to China took a hit. It's hardly a shocker that a country with high exposure to the world’s second-biggest economy would be harmed by the slowdown there. China's softness is ricocheting through Asia and beyond. Japan's performance looks decidedly mainstream in this regard.

Private consumption rose 0.6 percent from the September quarter, a tad less than anticipated. One real head-turner is the 2.4-percent jump in business investment. Economists had penciled in an increase of 1.8 percent.

So when Japan's performance is critiqued, what’s the basis of comparison? There are a number of things going right with Japan that don't get enough attention. High on that list has to be the labor market. The jobs report this month showed an unemployment rate of 2.5 percent.

Oh, don't pay too much attention to that, the naysayers crow. That microscopic jobless rate is just those darned demographics again. Well, okay … but demographics were supposed to spell doom.

We need to reset the narrative. Does Japan have its challenges? You bet. The planned increase in sales tax later this year will be a hurdle; the last hike in 2014 was blamed for a recession. And GDP as a measure of overall performance has its opponents.

And, yes, an aging society and shrinking population are right up there. Then again, they could just as easily become strengths. Even the country's notorious distaste for immigration is being chipped away. I wrote about these themes here and here.

But let's stop saying nothing in Japan is ever good enough. I can't help but think that Japan wouldn’t be such a scapegoat were it not for the go-go era of the 1980s and the lionizing of its business practices. Just the way people later gushed over China's superlatives.

In Japan's case, don't let the perfect be the enemy of the good. Or the merely okay.

    This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Daniel Moss at dmoss@bloomberg.net

    To contact the editor responsible for this story:
    Rachel Rosenthal at rrosenthal21@bloomberg.net