Tokyo, Sept. 17 (Jiji Press)–The ongoing economic expansion in Japan has lasted 74 months through July based on recent preliminary government statistics, highly likely surpassing the “Izanami” boom from February 2002 to February 2008, the longest period of growth since the end of World War II. During the current expansionary phase, the country’s nominal gross domestic product increased amid inflation, and corporate profits have hit record highs thanks in part to the yen’s sharp depreciation. With inflation-adjusted real wages failing to grow markedly, however, it is difficult for households to feel the economic expansion. According to the preliminary data released by the Cabinet Office on Sept. 7, the index of coincident economic indicators continued improving. Whether the current expansionary phase is the longest since the end of the war will be formally decided on the basis of discussions by a panel of experts under the government agency in charge of determining the economy’s cyclical peaks and troughs. The Japanese economy hit bottom in May 2020, during the COVID-19 pandemic, and began its current expansionary phase the following month, shifting from protracted deflation to inflation. The country’s nominal GDP in April-June this year reached 689 trillion yen at an annual rate, far more than 528 trillion yen in April-June 2020, according to recent data from the Cabinet Office. Finance Ministry data showed earlier this month that combined ordinary profits at manufacturers and nonmanufacturers, excluding financial and insurance companies, in April-June this year rose for the seventh straight quarter to hit a record high. But the economy lacks vigor. According to Mitsubishi UFJ Research and Consulting Co., annualized quarter-on-quarter growth of the country’s inflation-adjusted real GDP stood at 1.3 pct on average between October-December 2020 and April-June this year, excluding July-September 2020, when the economy grew sharply after a slump attributable to the COVID-19 pandemic. The figure was little changed compared with 1.6 pct during the 73-month Izanami boom and 1.4 pct during the 71-month economic expansion from December 2012 to October 2018, which was supported by the Abenomics reflationary policy mix of then Prime Minister Shinzo Abe. Meanwhile, growth in the annual consumer price index came to 2.1 pct on average during the current expansion, higher than 0.0 pct during the Izanami boom and 1.1 pct during the Abenomics boom. The wage hike rate in “shunto” annual labor-management negotiations topped 5 pct for the third straight year until 2026. But the average growth in real wages has remained near zero, helping keep personal consumption sluggish. The economy “has almost leveled off although it is not deteriorating,” a senior Cabinet Office official said. Shinichiro Kobayashi of Mitsubishi UFJ Research and Consulting said that the key to getting out of the economic expansion that is hard to feel is “whether we can curb inflation and the yen’s excessive weakening and wiping out concerns about the future by stabilizing the social security system, thereby creating an environment in which people can use their money with peace of mind.” END [Copyright The Jiji Press, Ltd.]
