|Japan’s GDP is expected to continuously grow as shoppers will stock up on things ahead of the tax hike in October / Photo by Sakarin Sawasdinaka via 123rf|
The real gross domestic product of Japan has gained 0.4 percent in August this year compared with July largely due to external demand or the difference between exports and imports. This is according to the Japan Center for Economic Research as cited by Nikkei Asian Review, a magazine that brings Asian business, politics, and economy stories.
Japan’s GDP in August
Real gross domestic product is an inflation-adjusted measurement that reflects the value of all services and goods produced by an economy within a given year, according to financial platform Investopedia. In macroeconomic assessment, a high GDP means that a high amount of production is taking place in the country. This also signifies that citizens have a higher income as they are spending more. Japan’s August GDP marks the reversal of economic contraction or decline in the output that was observed in July.
JCER emphasized that external demand lifted the gross domestic product of the country by 0.2 percent. In August, imports likewise fell compared with exports.
Nikkei also previously reported that Japan’s GDP is expected to continuously grow as shoppers will stock up on things ahead of the tax hike in October. The sales of detergent and toilet paper became their economy’s hint that the Japanese are taking the cover of the sales tax hike to 10 percent.
Tax hike in October
Shinkin Central Bank Research Institute’s senior economist Takumi Tsunoda opined via Reuters that there are “no reasons” why the country will postpone the tax hike. The research firm specializes in cooperative banking, finance, and regional banking. Reuters conducted a poll among 41 economists and 40 of them expected that the Japan levy will be increased as scheduled, which is in October.
|The second time Japanese Prime Minister Shinzō Abe postponed the hike was in 2016 / Photo by everythingpossible via 123rf|
Tsunoda also mentioned the 2014 increase of tax in Japan, which was larger at 8 percent from 5 percent. He believed that the proposed steps by the government will be “significant” to soften the blow of the tax hike. Yet, there remains speculation that Japanese Prime Minister Shinzō Abe will delay the increase for the third time if the country is not hit by a big economic blow.
The second time Abe postponed the hike was in 2016. It was when he mentioned that the Group of Seven (G7) industrial powers, comprising the United States, the United Kingdom, Japan, Italy, France, Germany, and Canada, shared a “strong sense of crisis” over the global economy. The G7 summit back then declared that global growth is their urgent priority.
When Reuters polled analysts on whether Japan’s government will need an extra budget to support the economy, 22 of 38 participants said “no.”
Loose monetary supply projected by economists
Research division Norinchukin Research Institute’s chief economist Takeshi Minami commented that there were already “enough steps” that the government has adopted to cushion the pains from the tax increase. On the other hand, 24 of the 40 economists polled by the news organization projected that the Bank of Japan will begin to normalize its loose monetary policy. A loose monetary policy happens when the money supply is expanded and becomes easily accessible to the citizens to encourage economic growth.
GDP by year and industry: the US and Japan
Here is the detail on the worth of Japan’s gross domestic product by year:
2010: US$5700.10 billion
2011: US$6157.46 billion
2012: US$6203.21 billion
2013: US$5155.72 billion
2014: US$4850.41 billion
2015: US$4389.48 billion
2016: US$4926.67 billion
2017: US$4859.95 billion
2018: US$4970.92 billion
The data was provided by economic indicators and forecasts platform Trading Economics. Meanwhile, World Atlas published that the Japanese economy is the second-largest developed economy and the third-largest in terms of their nominal GDP. As of August 2019, Japan has a nominal GDP of $5.18 trillion. The biggest industries that contribute to such GDP are manufacturing, agriculture and fishing, and tourism. Only 0.2 percent of their population lives under the poverty line. The country’s main exports are iron and steel products, auto parts, motor vehicles, and power generating machinery. Moreover, the major export destinations for Japan are the US (20 percent), China (17.55 percent), Hong Kong (5.6 percent), Thailand (4.5 percent), and South Korea (7.1 percent).
The US Bureau of Economic Analysis also released a prototype statistics for GDP by industry for the first quarter of 2019 to have a complete picture of their economic condition. The leading contributors to the increase in the United States' economic growth in the first quarter of 2019 are social assistance and healthcare, retail trade, and finance and insurance.
The real value-added, which is the measure of an industry’s contribution to the GDP, of the finance and insurance industry increased by 9.5 percent in the first quarter this year. This was after a 6.2 percent decrease in the fourth quarter of 2018. The first-quarter growth reflects an increased number of insurance carriers and other related activities.
Retail trade also rose to 11.9 percent in the first quarter. Social assistance and healthcare increased to 6.2 percent.