Japan’s Economy in Recession. Japan’s economy, the world’s third largest, has seen two consecutive quarters of contraction and is now in its first recession since 2015.
The economy shrank by 7.3 percent in 2019’s final quarter and again by 3.4 percent in the first three months of this year, with exports down 6 percent.
The first quarter’s outcome was better than expected. Economists had forecast a 4.6 percent drop and a 1.6-percent slide in consumer spending, which actually shrank only 0.7 percent.
The country’s GDP, however, is expected to wither by 22 percent this quarter, according to economists polled by Reuters.
Japan’s government has put together a stimulus plan valued at $1.1 trillion and will supplement it later this month with more money. The Bank of Japan began its own stimulus measures in March and expanded them in April.
Toyota to Resume Vehicle Production. Toyota Motor Co., the world’s 10th largest company by revenue as of last December, predicted that a reviving economy and an end to the lockdown could restore car sales to pre-pandemic levels by 2021, as they already have in China, the company said.
For the operating year ending in March, Toyota reported flat revenue but a slight increase in profits to $19.3 billion.
Toyota expects its overall sales to drop about 20 percent during this operating year and operating profits to be off by as much as 80 percent.
After reporting an annual loss in 2009, the company brought in a new CEO who disciplined spending and investments, ensuring that Toyota would be able to survive hard times.
As a result, Toyota reports having almost $75 billion in cash, which will help it keep its planning and development work steady through this year, it said, and weather bumps along the economy’s road to recovery.
It will need the money.
The company foresees an 80-percent drop in operating profits this year compared to last and will cut production in Japan by 122,000 vehicles now that the country’s economy is expected to contract by 22 percent this quarter.
TRENDPOST: Again, to continually drive home the point that the global economic slowdown preceded the COVID Economic Lockdown imposed by politicians, Japan’s economy was already in decline in 2019.
Consumer spending began to dramatically fall last October following the Japanese government increasing consumption tax from 8 percent to 10 percent.
We note this because the slow restarting of an already slowing down economy will not speed up growth.
And Japan, the world’s third largest economy, with one of the highest debt to debt to GDP ratios in the world at 234.2 percent, will dive deeper in debt with their new $1.1 trillion stimulus package.
India’s Prime Minister Promotes Celente’s Self-Sustaining Economy Model. At the onset of the Panic of ’08, Gerald Celente had been advising nations to “Buy and Make Local,” rather than getting products manufactured overseas.
He noted that in “self-sustaining” economies, nations such as the United States, which is rich in human and natural resources, while paying more to make products made domestically, would also in turn raise the wages of those making them, thus equalizing the cost-benefit while creating more jobs.
Now, the Indian government will begin an initiative to relieve the country’s dependence on imports and to manufacture more goods and offer more services through domestic enterprises.
Narendra Modi, India’s prime minister, tied the economic transformation to the lockdown relief plan his government announced last month.
That program, valued at the equivalent of $22.5 billion, provided free food, cooking gas, and a cash payment to most Indians. India’s central bank also cut its key interest rate.
Modi put the value of the new plan at $267 billion.
“We strive for an economy that does not just bring an incremental change but a quantum jump,” Modi said in a televised address. “Let’s be vocal for local.”
TREND FORECAST: One of our Top Trends has been the self-sustaining economy: nations seek to become less dependent on imports and to produce more of their goods at home. That shift would raise consumer prices but also would raise wages and standards of living.
However, in the case of India, it has eight consecutive quarterly declines in its GDP. It is unlikely that Modi’s country can attract or generate the investment needed to make his vision a reality in the foreseeable future.
However, while it will somewhat improve the Indian economy and his popularity ratings, more importantly, this is a trend that will sweep the globe, leading to more nationalism movements which in turn will disrupt established political parties that favor globalization.
Turkey: Financial Crisis. The pandemic panic has triggered mass unemployment in Turkey, where the jobless rate stood at 13.5 percent last December.
The country also faces the prospect of raging inflation after the country’s central bank has cut interest rates eight times in the last year.
Recip Erdoğan, Turkey’s president, has insisted that lowering interest rates will tamp down inflation, a notion contrary to economic experience as well as theory. He has vigorously pressured the central bank to make the successive rate cuts.
Turkey has run through billions of dollars in its foreign currency reserves to prop up the lira, its steadily weakening currency, which fell to record lows against the dollar last week.
The lira has lost 15 percent of its value since this year began.
In addition, the country’s economy will contract by as much as 5 percent in the second and third quarters of this year, analysts predict.
Turkey entered the crisis with a heavy burden of foreign debt and was depending on foreign investors to keep financing it. Most of those investors have now taken their money elsewhere.
As a result, the country is deciding whether to impose capital controls or ask the International Monetary Fund for aid.
Erdoğan has laid his country’s economic woes at the door of unspecified nefarious foreign forces.
“We are very aware of the traps being set for our economy,” he said in a televised appearance and “the insidious goals behind them.”
