The real Japanese economy? High-tech
Japan’s economy has been misconstrued by the interests of American auto companies and pork exporters. That’s according to Japan expert Scott Foster, who said the two industries have stolen more than their fair share of headlines about Japan. Foster, an advisor to TAP Japan, alliance partner at Translink, and SNS Ambassador for Asia, spoke to the audience at Future in Review Friday morning about how he sees the real Japanese economy.
What does that look like? “We have an economy that is very mature and has limited growth potential,” he said. Even with an activist government. That’s not a bad thing: Japan’s economy makes up a hefty 8-9 percent of the world economy, unemployment is just 3-4 percent and Japan is still dominating in industries like the manufacture of precision technological components, cars and LNG engineering.
“The Google phone will be using processors from Toshiba,” he explained. “So, they have their niche and it’s a very high-tech niche.”
They are also capitalizing on the misfortune of other national economies. “They don’t have a banking crisis now,” Foster explained. “They had theirs 20 years ago.” So, he says, the Japanese have been scooping up assets dumped by cash-strapped financial institutions around the world during the financial crisis.
Foster believes that worry about Abenomics, the economic policy named after Japanese prime minister, Shinzo Abe, has proved unfounded. Instead Japan has seen top line GDP growth, corporate profits through the roof, and increased tax revenues. Businesses, through an agreement with the government, have raised wages and bonuses, which has driven more growth.
“The premise of Abenomics was totally different than Wall Street Journal thinking or Western economic thinking,” Foster said. Abenomics, he said, gets one key thing right: “If you don’t have money in people’s pockets, it’s not going to generate growth.”
Still, Japan’s biggest challenge, its huge national debt, is yet to come. “More has to be done and the easy part has been finished,” Foster explained. “From now on, it’s going to be a lot harder.”