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  • Radboud Molijn

"Japanews Digest" February 2024

Every week, we scour the web for the hottest Japanese news items. At the end of the month, we translate a selection of articles into English and curate them into a little digest so you can get an overview of the latest news that moves Japan. The digest is divided up into 4 categories in no particular order: Economy, Corporate, Society and Politics.


The following covers major news highlights of February 2024, presented in chronological order per category.


Economy


Japan's Nominal GDP Slips to Fourth Place in the World, Surpassed by Germany (February 15th)


Japan's nominal GDP for the past year was $4.2106 trillion, while Germany's was $4.4561 trillion. Japan's nominal GDP increased by 5.7% compared to the previous year due to high prices, but when converted to dollars due to the depreciation of the yen, it decreased.


Nikkei Stock Average Hits Record High (February 22)


The closing price on the 22nd reached 39,098 yen. For the first time in 34 years, surpassing the post-war record high of 38,915 yen set during the bubble period in 1989.

Positive factors such as strong earnings of Japanese companies, a bullish stock market in the United States, and a shift of investment assets to Japan due to China's economic slowdown contributed to this.


Real Wages Decline for Second Consecutive Year

The Ministry of Health, Labour and Welfare announced the "Monthly Labour Survey" (preliminary) for the last fiscal year. Nominal wages per worker increased by 1.2% compared to the previous year. However, real wages, which deduct price fluctuations from nominal wages, decreased by 2.5% compared to the previous year.

The decline in real wages is the second consecutive year. While nominal wages increased due to inflation, the real take-home income decreased due to the increase in living costs caused by inflation.


Governor Ueda Expresses View That Japanese Economy is in Inflation (February 22)


Governor Ueda spoke at the Diet session. He expressed the view that the current Japanese economy is in a state of inflation, not deflation. This is the first time Governor Ueda has explicitly stated that the Japanese economy is "inflationary."


Japan has been unable to escape from a deflationary economy where prices have continued to fall despite efforts over the past 30 years, including zero interest rate policies and Abenomics (unprecedented monetary easing). However, there has been a continuation of price increases for about the past two years, indicating a transition to an inflationary economy where prices continue to rise.


Real Wages Decline for Second Consecutive Year


The Ministry of Health, Labour and Welfare announced the preliminary "Monthly Labour Survey" for the last fiscal year. Nominal wages per worker increased by 1.2% compared to the previous year. However, real wages, which deduct price fluctuations from nominal wages, decreased by 2.5% compared to the previous year.


The decline in real wages is the second consecutive year. While nominal wages increased due to inflation, the real take-home income decreased due to the increase in living costs caused by inflation.


Corporate


Toyota's Market Capitalization Exceeds 50 Trillion Yen for the First Time Among Japanese Companies (February 6)


Stock prices rose following strong earnings. The market capitalization exceeded 51 trillion yen on the 6th and exceeded 54 trillion yen on the 8th. Excluding Toyota, NTT set the previous record of 48.672 trillion yen during the bubble period in 1987.


Lawson and KDDI to Form Capital Business Alliance, Aiming for the "Convenience Store of the Future" (February 6th)


KDDI, which operates the telecommunications service "au," conducted a tender offer to fully privatize Lawson's shares. According to Lawson's president, the initiative aims to become the "convenience store of the future." By jointly utilizing the store networks of Lawson and au shops, they plan to establish a digital-era living infrastructure. With a combined total of 16,800 stores from Lawson and au shops, they believe that by combining digital services, they can create value exceeding the number of stores.


The Mitsubishi Pencil Company Acquires High-End Stationery Manufacturer "LAMY" (February 29th)


LAMY is a high-end stationery manufacturer from Germany. Mitsubishi Pencil will make it a wholly-owned subsidiary.


Japan McDonald's Records Highest Sales and Profits Ever (February 8)


Japan McDonald's announced its fiscal year 2023 earnings. Sales revenue was 777.7 billion yen, and operating profit was 40.8 billion yen, both reaching record highs. The increase in prices of products contributed to a 7.0% increase in sales per store on average. The performance forecast for fiscal year 2024 anticipates sales revenue of 820 billion yen and operating profit of 45.5 billion yen, expecting increased sales and profits.


Sony Revises Downward Sales Forecast for Gaming Business; PS5 Sales Below Expectations (February 14)


Sony announced its consolidated financial results for April to December of last year. Sales revenue was 9.5 trillion yen (up 20% year-on-year), and operating profit was 973.4 billion yen (down 15% year-on-year). Revenue increased in the gaming, music, and image sensor businesses, but the financial business recorded a deficit of 118.8 billion yen due to deteriorating insurance revenue.


The annual performance forecast anticipates sales revenue of 12.3 trillion yen and operating profit of 11.8 trillion yen, similar to previous expectations. However, the sales forecast for the gaming business was revised downward by about 210 billion yen from the previous estimate. The sale of PS5 consoles remained at 16.4 million units, making it difficult to achieve the initially projected 25 million units for the year, including the holiday season.


Bandai Namco Records Substantial Decline in Profits; Strong Performance in Gunpla But Online Game Revenue Struggles (February 14)


Bandai Namco announced its consolidated financial results for April to December of last year. Sales revenue was 772 billion yen (up 28.9 billion yen year-on-year), and operating profit was 78.2 billion yen (down 28 billion yen year-on-year).

The toy and hobby business achieved record profits. The "Gundam" (Mobile Suit Gundam) related products alone generated 1 trillion yen in sales. It is expected to generate around 1.4 trillion yen in sales annually.

The digital business, which includes online games, experienced a substantial decline in profits. It recorded an impairment loss due to poor performance of new titles. Despite initially expecting an operating profit of 410 billion yen from the digital business alone, the profit forecast was drastically revised downward to 1 billion yen.


Nissan to Launch Self-Driving Taxis as Early as Fiscal Year 2027 (February 28th)


Nissan plans to start a paid transportation service using its own self-driving cars from fiscal year 2027. Demonstration experiments will begin this year. Nissan aims to address the shortage of public transportation drivers due to the aging population while establishing a new revenue stream for the automotive industry. Honda (Honda Motor Co., Ltd.) has also announced plans to start self-driving taxis from 2026.


Society


Last Year's Birth Rate Dropped to a Record Low of 750,000 (February 27th)


The Ministry of Health, Labor and Welfare announced the results of the population dynamics survey for the past year (preliminary). The number of births was 750,863, a decrease of 40,000 (5.1%) from the previous record low of 790,000 two years ago. The number of marriages also decreased to 480,000, approximately the same level as in 1933 (compared to 510,000 two years ago).


The Ministry of Health, Labor and Welfare attributes the decrease in the birth rate to the decrease in the number of marriages in recent years due to the COVID-19 pandemic. Among Japan's birth rate, the percentage of extramarital births is typically around 2%, and there is a strong correlation between the number of marriages and the number of births.


Politics


Prime Minister Kishida Plans to Cover Funding for Declining Birthrates by Increasing Social Insurance Premiums (February 6th)


Starting from fiscal year 2026, social insurance premiums will be increased by about 500 yen per month to secure funding for extensive measures aimed at addressing the declining birthrate. Prime Minister Kishida revealed this plan during a session in the Diet. In response to concerns about tax hikes, Prime Minister Kishida expressed the view that "substantial burdens will not be incurred due to expenditure reforms and wage increases."


"Cabinet Decides on Amendment to Childcare Support Law," to Be Submitted to the Current Ordinary Diet Session (February 16th)


The establishment of a "childcare support fund" (tentative name) will secure an annual budget of around 1 trillion yen for childcare-related expenses. Funding will be covered by increasing social insurance premiums. Starting from 2026, an additional 300 to 500 yen per month will be collected.


Other measures, such as abolishing income restrictions on child allowances and extending the period of child allowance payments (from middle school graduation to high school graduation), have also been included.


Motion of No Confidence Against Minister Moriyama Also Rejected (February 20th)


The Constitutional Democratic Party, the Communist Party, and others submitted a motion of no confidence, questioning Minister Moriyama's relationship with the former Unified Church. It was rejected by the opposition of the Liberal Democratic Party, Komeito, and the Japan Innovation Party. The National Democratic Party voted in favor.


"Social Insurance Premium Increase of 1,000 Yen May Be Possible," Says Minister for Children's Policy Kato (February 22nd)


Minister for Children's Policy Ayuko Kato stated during a Diet session that the monthly increase of 300 to 500 yen in social insurance premiums is an average, and depending on income and insurance type, it could exceed 1,000 yen per month. Concrete figures will be announced soon.

Minister of Education Satoru Moriyama Denies Resignation, Denies Knowledge of Recommendation Letter from Former Unified Church (Mid-February)

It was reported that Minister of Education Satoru Moriyama met with organizations related to the former Unified Church during the 2021 House of Representatives election, and there was also a recommendation letter equivalent to a policy agreement. While acknowledging the fact of the meeting, Minister Moriyama explained that he has no memory of the recommendation letter. He denied calls for resignation from the opposition parties.


Prime Minister Kishida Attends Political Ethics Review Committee for the First Time, Aiming for Legislative Amendments Including Joint Responsibility (February 29th)


In response to the kickback issue involving members of the Abe faction, a political ethics review committee was convened. Prime Minister Kishida attended the committee for the first time as the incumbent prime minister. Prime Minister Kishida expressed apologies for the series of problems. Regarding the undisclosed use of funds, he stated that there were no signs of use other than for political activities and that there was no illegality in the purpose itself.


As a future measure, he mentioned the introduction of a joint responsibility system. If the accounting officer is criminally prosecuted for a political fund issue, the supervising politician will also be held responsible in some way. They aim to pass related bills during the current Diet session.


All 85 members of the Abe and Nikai factions, including three former members, received kickbacks. A total of 579.49 billion yen flowed to individual lawmakers as kickbacks between 2018 and 2022 without being recorded in the financial reports. Among the 85 lawmakers, 32 recognized the kickbacks.




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