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Economic Recovery: The Strong Points of the Japanese Economy

November 2, 2009

Background: The economic news this morning had some light poking through the dark clouds. With the positive GDP growth reported in the U.S. economic news seems to be taking a turn for the better. Investment banks are reporting profits instead of dismal losses, housing sales have gone up instead of down, and “economic recovery” seems to be a phrase that is at least being talked about.

In Japan vs. the U.S., signs of economic recovery differ. Although GDP is important, there are many other factors that drive growth in Japan. Each newspaper reported a different positive economic phenomenon in Japan.

Nikkei: “Steel Exports for September went up for the Second Month in a Row” The Nikkei reported that steel exports to China and India went up 4.3% in September, the second month in a row to see growth. To underline the importance of exports to the Japanese economy, they commented that “exports to China and Korea are towing the economy to recovery.”

The numbers for exports show that the largest trading partner for steel, Korea, has seen a 10% increase compared with last year, to over 1 million tons. Exports to China are at 600,000 tons, up 20%, while exports to Taiwan are at 380,000 tons, up 30%.

Asahi: “While Consumption Freezes, Uniqlo Grows Positively, McDonald’s Records Largest Profits” The Asahi points to the great performance of both McDonald’s and Uniqlo during these difficult times of low consumption. They claim not only are their prices competitive, but they’re still able to maintain high levels of customer service under increasing amounts of visitors. Uniqlo is also offering a variety of clothes when compared with other department stores.

McDonald’s Japanese Holdings announced that their profits were up 3% to 39,740,000,000 billion dollars, the highest ever. They sited their “free coffee” campaign, along with their ever popular dollar menu, drew record visits to their restaurants.

YomiuriGovernment Tax Revenue from Corporations Takes its first Plunge” While some sectors of the Japanese economy are doing well, the government on the other hand is taking in less tax income from corporations. The government claims it has a deficit with corporations at 30 billion dollars. Companies have had declining profits, and their tax refunds haven’t gotten much smaller. The Yomiuri claims this is the lowest rate of corporate tax revenue since 1960.

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