Japan 01 (May 08 - Dec 09)

[winston]

Very good observation. Will keep my eyes open on this issue from now onwards...

[LenaHuat]

Another sorrowful tale abt the aged:-

Poverty, Pension Fears Drive Japan's Elderly Citizens to Crime

http://www.bloomberg.com/apps/news?pid=20601109&sid=as80aWlHdA1M&refer=home

[millionairemind]

2nd largest economy bites the dust..

Japan's Economy Shrinks 0.4%, Confirming Recession (Update1)

By Jason Clenfield

Nov. 17 (Bloomberg) -- Japan's economy, the world's second largest, contracted more than economists expected in the third quarter, confirming it entered its first recession since 2001 as companies cut back spending.

Gross domestic product fell an annualized 0.4 percent in the three months ended Sept. 30, the Cabinet Office said today in Tokyo. Economists predicted the economy would rebound 0.1 percent after shrinking a revised 3.7 percent in the previous period.

The slowdown that last month forced Prime Minister Taro Aso to propose a stimulus package is likely to worsen as export demand weakens and companies respond with investment cuts and layoffs. Toyota Motor Corp. and Canon Inc. slashed profit forecasts in the past month as U.S. consumers clamp down and the yen's rise against the dollar erodes the value of sales.

``The economy is still so sensitive to the global business cycle. That's the problem,'' said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo. ``A long as the global economy keeps sinking, Japan will probably experience a deep recession.''

The yen traded at 96.29 per dollar as of 9:02 a.m. in Tokyo from 96.09 before the report was released.

The Bank of Japan last month cut its key interest rate to 0.3 percent, the first reduction in seven years. Governor Masaaki Shirakawa and his colleagues said the global downturn and the yen's 9.4 percent advance against the dollar since September have created a ``severe'' earnings environment for Japanese companies.

Still, Japan's economy will probably suffer less than its biggest counterparts after its companies shed debt and streamlined labor forces following the bursting of the property and asset bubble in the early 1990s. The world's second-biggest economy will shrink 0.1 percent next year, according to the Organization for Economic Cooperation and Development, less than the 0.9 percent and 0.5 percent contractions in the U.S. and Europe.

Approval Ratings
Aso, whose approval ratings have tumbled since he took office in September, last month said the government will spend 5 trillion yen ($52 billion) to help households and small businesses weather the crisis. The plan will put pressure on a government budget already strained by debt that exceeds 180 percent of gross domestic product, former Economic and Fiscal Policy Minister Hiroko Ota said last week.

Toyota, which makes more than three-quarters of its sales abroad, forecast profit will fall this fiscal year by almost 70 percent. The carmaker will delay adding production capacity at a domestic plant that makes Lexus models, the Nikkei newspaper reported this month. It will also lay off 3,000 workers by the end of March.

The ratio of jobs to applicants has fallen for eight months and the deteriorating profit outlook for companies is also putting pressure on wages. Winter bonuses, which typically account for about 10 percent of a fulltime worker's annual pay, will fall 2.9 percent this year, the Nikkei reported last week.

[millionairemind]

Japan's Exports Fell the Most in Six Years in October (Update1)
By Jason Clenfield

Nov. 20 (Bloomberg) -- Japan's exports declined at the fastest pace in six years in October as the global financial crisis intensified, stifling overseas demand.

Exports, the main engine of Japan's economic growth in the past six years, fell 7.7 percent from a year earlier, after rising 1.5 percent in September, the Finance Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted an 8 percent drop.

The financial crisis that erased $16 trillion from global stock markets since Lehman Brothers Holdings Inc.'s collapse has smothered growth worldwide. Exporters including Canon Inc. have slashed profit forecasts and cut investment plans in the past month, damping prospects for an economy that slipped into a recession in the third quarter.

``Exports and capital spending have declined across the board as the outlook for the key European and North American economies has become increasingly gloomy,'' said Naoki Iizuka, senior economist at Mizuho Securities Co. in Tokyo. ``Japan's real gross domestic product will inevitably shrink in the fourth quarter and in the first quarter of next year.''

The yen traded at 96.07 per dollar at 9:03 a.m. in Tokyo from 95.88 before the report was published.

Japan's economy contracted for a second consecutive quarter in the three months ended Sept. 30, following the U.S. and Europe into recessions, as businesses cut spending. Growth in China, Japan's largest trading partner, has slowed for four quarters.

Emerging Markets

Today's report showed the global financial crisis is hurting demand from the emerging markets that have propped up Japan's export growth as the U.S. and Europe falter. Exports to Asia fell 4 percent, the first decline in more than six years, the ministry said. Shipments to China slid 0.9 percent, the first drop in three years.

Exports to the U.S. plunged 19 percent. Shipments to Europe dropped 17.2 percent.

Imports climbed 7.4 percent, causing a trade deficit of 63.9 billion yen ($666 million), the third shortfall this year.

In addition to the weaker overseas demand, exporters have been hurt by the yen's appreciation, which erodes the value of repatriated earnings. Japan's currency rose to a 13-year high against the dollar last month and has gained 22 percent versus the euro since September.

Nissan Motor Co., Japan's third largest automaker, said this week it will be unprofitable in the second half of the year ending March 31. The carmaker's U.S. sales fell 34 percent in October.

Canon, the country's largest camera maker, last month forecast profit growth would fall for the first time in nine years. The company said it will cut capital spending 4.7 percent in 2008.

[winston]

Japanese Oct exports slide as global slowdown bites

TOKYO - Japan's exports logged their biggest annual decline in seven years in October, pushing the trade balance into deficit and reinforcing worries the global financial crisis may push the economy deeper into recession.

Exports to Asia fell for the first time since 2002 with sales to China also falling, a sign that fallout from the credit crisis has spread across Japan's key export destinations.

'The fall in exports to Asia reflects that their economies are also taking a blow from weakness in developed economies,' said Takeshi Minami, chief economist at Norinchukin Research Institute.

'Japan could continue to log a trade deficit for the rest of this year.'

BoJ meeting
The Bank of Japan begins on Thursday a two-day meeting at which it is expected to keep interest rates on hold, but debate will likely focus on the widening damage from the financial turmoil, which has heightened prospects of another rate cut by the Federal Reserve.

Japan's Nikkei share average fell more than 4 per cent on Thursday after US shares plunged to their lowest levels in 5-1/2 years reflecting the gloomy outlook for the world economy.

Japan, the world's second-largest economy, slipped into its first recession in seven years by shrinking in the third quarter, buffeted by a global financial crisis that has hit Japan's biggest export markets.

The euro zone is also in recession, and the United States is expected to follow in the fourth quarter.

Exports fell 7.7 per cent in October from a year earlier, almost matching economists' median forecast for a 8.0 per cent drop to record their biggest decline since December 2001, Ministry of Finance data showed. Imports rose 7.4 per cent from a year earlier.

That pushed the trade balance to a deficit of 63.9 billion yen (US$668.5 million), the second monthly deficit in three months and lagging market expectations for a 80 billion yen surplus.

Shipments to Asia had previously cushioned the impact from weakening US and European demand on many Japanese companies but October figures showed a 4 per cent drop in sales to Asia from a year earlier. Exports to China slipped 0.9 per cent, posting the first decline in over three years.

The Bank of Japan may consider more measures to soothe frazzled money markets at its policy meeting this week but is seen keeping rates steady until a shrinking economy or the global financial crisis demand a more drastic response.

A rate decision will be announced on Friday.

The Bank of Japan cut its benchmark interest rate by 20 basis points to 0.3 per cent last month, joining global central bank efforts to contain the damage from the crisis. -- REUTERS

[millionairemind]

Japanese manufacturers sharply cut back production
The Associated PressPublished: November 28, 2008

TOKYO: Japanese manufacturers sharply scaled back production in October and are likely to make more cuts ahead, the government said Friday, as a deepening global slowdown saps overseas demand for the country's cars and gadgets.

Industrial production in October plunged 3.1 percent from the previous month, following a 1.1 percent gain in September, according to the Ministry of Economy, Trade and Industry. The result was worse than the 2.5 percent decline forecast by Kyodo News agency.

The data underscore the grim outlook for the world's second-largest economy as it wrestles with the perils of its heavy dependency on exports.

Japan's current recession stems largely from a sharp pullback in corporate investment amid the unfolding global financial crisis and sputtering worldwide demand. Exports in October marked their biggest decline in seven years.

Adding to the pain is a stronger yen, forcing a growing number of exporters big and small to slash their future expectations for profit, sales and spending.

The electronics giant Panasonic became the latest victim to the global whiplash. On Thursday, it revised down its annual profit forecast by 90 percent, blaming a strong yen, sluggish sales and heavy discounting.

Earlier, Toyota Motor reduced its net profit full-year forecast to ¥550 billion, or $5.5 billion - about a third of last year's earnings.

Companies expect conditions to only get worse.

The government projects factory output to drop 6.4 percent in November and fall 2.9 percent in December. It cut its assessment of industrial production, describing it as "on a downward trend."

October's dismal figures stems largely from heavy production cutbacks in transport equipment, electronic parts and devices, and general machinery.

Separately, the government released other troubling data Friday.

Average monthly household spending in October fell a worse-than-expected 3.8 percent from a year earlier. The figure is an important gauge for individual spending, which accounts for more than half of Japan's gross domestic product.

Retail sales fell 0.6 percent from a year earlier in the second straight month of decline.

Prices continued to climb in October, though at a slower pace than earlier this year. Japan's core consumer price index, excluding often volatile fresh food prices, rose 1.9 percent, climbing for the 13th straight month.

Meanwhile, Japan's unemployment rate stood at 3.7 percent in October, down a slight 0.3 percentage point from the previous month and better than a market forecast of 4.2 percent.

The number of jobless in October totaled 2.55 million, a decline of 160,000 from a year earlier, the Ministry of Internal Affairs and Communications said Friday.

[winston]

Japan firms to sack 30,000 temp workers: survey

Japanese companies plan to fire more than 30,000 temporary and part-time workers before the end of the business year as the recession deepens.

Companies will lay off at least 30,067 non-permanent workers in the six months to March 31, according to a survey released by the Labor Ministry showed.

The reductions have led to a spate of lay offs, the brunt of which have fallen on the easy-to-fire temporary workers that companies hired to augment their workforces during the expansion of the past six years.

Some 19,500 temporary workers in the manufacturing sector will lose their jobs in the next six months, the labor ministry said.

BLOOMBERG

[mocca_com]

countries are becoming more innovative in improving their economy. first is cut rate, then pump cash into the market, then set up currency swap, now allow tax breaks.. Hmm.. so what will we be expecting later?

Japan May Allow Tax Breaks on Repatriated Profits (Update1)
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By Keiko Ujikane and Kyoko Shimodoi

Dec. 5 (Bloomberg) -- Japan may introduce legislation that would waive taxes companies pay on profits returned from abroad, in an effort to help the economy emerge from a recession.

The ruling Liberal Democratic Party’s tax panel this month may approve a revision that would encourage companies to bring back profits earned overseas, panel adviser Takeshi Noda said in a Dec. 1 interview. The Trade Ministry advocates a similar move.

Japanese companies have an estimated 17 trillion yen ($180 billion) in earnings kept abroad, and a government advisory group last week said bringing some of that money home would encourage them to spend more on equipment, hiring and research. Requiring that businesses use the money for specific purposes such as capital investment or paying dividends to shareholders is pivotal for any tax waiver plan to work, said Naomi Fink.

“The plan will probably provide a positive effect to corporate activities, but the government should specify what they can do with the money,” said Fink, Japan strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. “That may set off a virtuous circle” by increasing productivity and investor returns that in turn would spur consumer spending, profits and wages, she said.

The Trade Ministry’s plan would enable companies to use the proceeds they repatriate for any purpose and wouldn’t impose a time limit on the tax breaks, said Yasuhito Nii, director of the ministry’s trade and investment facilitation division.

Homeland Investment Act

That’s different from legislation implemented in the U.S. in 2005. The U.S. Homeland Investment Act gave companies only a year to return profits at a discounted tax rate and required them to use the money to promote job creation.

Nii said limits would be too costly to implement because they would require the government to check whether companies are using the money correctly. ”It is important to let money circulate” by making it easier for companies to repatriate the money whenever they need to, he said.

Japan’s corporate tax rate is a combined 40.7 percent for both national and local taxes, among the highest in the developed world. That’s prompting companies to retain their earnings abroad.

“The tax break could function as a sort of an alternative to cutting corporate taxes,” said Takashi Inoue, manager of tax and accounting at Keidanren, Japan’s largest business lobby. “It’s a significant move as repatriated profits may contribute to economic growth.”

Not All Income

Under the trade ministry’s plan, tax breaks would only apply to the dividends that Japanese companies receive from their overseas affiliates, and other income such as interest payments and royalties wouldn’t be exempted, Nii said.

Earnings retained by foreign affiliates of Japanese companies stood at about 17 trillion yen in the year ended March 2007, Trade Ministry data show. Implementing the tax breaks would spur companies to bring back as much as 2 trillion yen, according to Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Securities Co. in Tokyo.

The U.S. plan prompted American businesses to return about $200 billion, one-third of the profits retained by their overseas units, Inadome said.

About 83 percent of small and midsized companies surveyed by the ministry in October said they would repatriate money if the tax break is implemented. More than two-thirds said they would spend the cash on equipment or research and development.

Shareholder Dividends

Some companies are already bringing back earnings to buy their own stock or pay dividends to shareholders, so waiving the tax is sure to increase the trend, Keidanren’s Inoue said. The Nikkei 225 Stock Average plunged 48 percent this year. The gauge rose 0.2 percent to 7,942.92 as of 10:24 a.m. in Tokyo.

Using the repatriated money to provide dividends to shareholders may encourage households to shift cash from their savings to stocks, said Fink at Bank of Tokyo-Mitsubishi UFJ.

Japan’s households had 741 trillion yen ($7.4 trillion) in cash deposits as of June 30, according to the Bank of Japan. The dividend yield on Nikkei stocks is lower than benchmark indexes in the U.S. and Europe, Bloomberg data show.

“Using the funds to pay out dividends to shareholders is a good choice,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “That money will eventually go to households.”

To contact the reporter on this story: Keiko Ujikane in Tokyo at [email protected]; Kyoko Shimodoi in Tokyo at [email protected].

Last Updated: December 4, 2008 20:25 EST

[LenaHuat]

Fr the Times :

Sony, the Japanese electronic giant, is to slash 8,000 jobs from its core electronics division after buckling under the pressures of a soaring yen and the collapse of consumer markets across the globe.

The huge layoff scheme which, despite its suddenness and severity, was attacked by some analysts as “too little, too late”, will see the 5 per cent reductions in permanent staff completed by 2010.

Around 10 per cent of the company’s 57 manufacturing sites will be closed entirely in the restructuring, with an overall reduction in new investment in electronics of 30 per cent.

[iam802]

Following article from Bloomberg says 16,000

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Sony Will Cut 16,000 Jobs as Recession Curbs Demand
http://www.bloomberg.com/apps/news?pid= ... refer=home