Category: Japan

Japan’s New Foreign Aid Policy Breaks with Tradition

The usage of aid solely to support economic development and not for strategic reasons has been the bedrock principle of Japan’s aid policy since the country first began providing foreign aid to developing countries in 1954. Japan’s Official Development Assistance (ODA) Charter unequivocally declared a total prohibition of ‘any use of ODA for military purpose’. However, the ODA’s replacement, the Development Cooperation Charter introduced in February 2015, emphasises balancing security and development.

Japan’s Slow Motion Crisis Response

In the face of the 2011 triple disaster, the residents of Fukushima banded together to manage the crisis. The word kizuna has become widely used to describe the people-to-people bonds underpinning the remarkable endurance displayed by the residents of Fukushima. Kizuna refers to the strength of Japanese society. It signifies the ties that bind people together and thus Japan’s intangible social resources.

Do You Want to Bet Against another Japanese Rate Cut?

Early Tuesday in Tokyo, Japan will announce revisions to Q4 GDP.  A downward revision to business spending risks will shave the initial estimate from a contraction of 1.4% at an annualized rate to 1.5%.  Regardless, the key takeaway is that the world’s third-largest economy contracted in two of the four quarters last year.  Recall initially, the consensus was for a 0.8% annualized contraction in Q4.  The anticipated revision means the contraction was nearly twice as much as initially expected.

Japan Faces the Long-Term Consequences of the Tsunami

The stillness is most overwhelming. The rubble has been cleared away. The grass has grown back. However, along much of the coastal strip devastated by the tsunami that struck Japan on 11 March 2011, a silence remains.

Update: Abe Moving on after Amari

Another Japanese minister bites the dust with Akira Amari’s resignation from the Shinzo Abe cabinet on 28 January. Yet this time, there may be more repercussions than usual for the government.

Ironically, Amari was previously chairman of the ruling Liberal Democratic Party’s Political Ethics Hearing Committee. Now he and his secretaries are at the centre of a continuing corruption scandal over revelations about money for favours.

Can Asian Regional Order Lead to Solid Economic Growth?

The regional order in East Asia is in flux. The relative decline of US power in Asia has led to new challenges. The principles, rules, norms and methods for managing the international agenda are being questioned. The willingness of the United States to maintain an active role in East Asia, alongside the behaviour of China and key groupings such as ASEAN will define the future of the region. How these key actors respond to the changing security environment will be crucial in determining the future of the security order in East Asia.

So, what does this mean for Japan?

Despite Some Positives, Japan’s Labor Market Challenges Persist

Japan’s labour market situation is improving. The unemployment rate of 3.1 percent in October 2015 was the lowest for 20 years. In addition, although improvement has been slow, wage growth has been accelerating. However, Japan’s labour market still faces several serious issues.

Japan Takes a Massive Liquidity Bet

Instead of boosting growth, the Bank of Japan’s negative interest rates will contribute to domestic fiscal deterioration, regional risks, and even global threats.  About a week ago, the Bank of Japan’s (BOJ) governor Haruhiko Kuroda said to the parliament: “We are not considering a cut in interest on bank reserves.”

What of Japan’s Abenomics Now?

We had been tracking the budding scandal that implicated the office of Japan’s Economic Minister Amari.  We had expressed our concern earlier this week that the scandal could sap Amari’s office strength and be a distraction.  However, the situation unraveled quicker than we anticipated and Amari resigned earlier today. 

In Japan, the BOJ Meets This Week and the TPP is Front Burner

The Bank of Japan meets later this week.  We do not think that it will expand its already aggressive monetary policy stance.  Given the largely operational adjustments announced last month, it seems premature to expect substantive adjustment now.  It is true that the recent string of data has been mostly disappointing, and the yen has strengthened on a trade-weighted basis over the past month.