France, Germany and Japan all Announce Negative Economic News

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France, Germany and Japan all Announce Negative Economic News

Walter Sebastian and Lee Jay Walker

Modern Tokyo Times

economicnews

Economic data released by France, Germany and Japan all announced negative performances related to the last three months of 2012. This once more underlies the need to restore economic order because the negativity of the current global economy within the developed world is abundantly clear. Indeed, high unemployment throughout the Eurozone is alarmingly high and while America appears to be stabilizing in this area, it is still a major headache for the Obama administration. Therefore, it appears that 2013 is following an all too familiar path.

The lingering economic malaise in Japan is nothing new because for the last two decades various different Japanese governments have tried to solve this issue alongside major business companies in this country. However, the priority in Japan is much more different than America, France, Germany and the Eurozone in general. This applies to the focus on maintaining low unemployment and the need to preserve social cohesion.

Germany is the leading economic powerhouse in the Eurozone but during the last three months of 2012 the GDP (Gross Domestic Product) contracted by 0.6%. Exports from Germany were hit hard during this period. Indeed, the severity of the 0.6% contraction can be seen by this being the deepest decline since the first quarter in 2009. This period in 2009 relates to the severe height of the international meltdown related to the financial crisis. Therefore, what does this say about the situation in early 2013?

The new government of Shinzo Abe in Japan clearly faces an uphill struggle in rejuvenating the economy even if the recent currency rate should ease the pressure on Japanese companies. This relates to the easing of the yen against global currencies like the American dollar in recent times. Indeed, the newly elected government in Japan is focused heavily on this area alongside stoking inflation, government economic stimulus packages and other important areas. It remains to be seen if the “new Abe dawn” will dramatically alter the economic landscape in Japan once his policies start to impact on the real economy.

It is reported that the economy of Japan contracted for the third consecutive quarter by 0.1%. This means that the last three months of 2012 provided little substance to an expected growth figure which was forecast by many analysts, even if they only forecasted 0.1% growth. After all, certain signals in the economy had hinted at stabilization to more optimism related to the changing political climate.

Shuji Tonouchi who is based in Tokyo at Mitsubishi UFJ Morgan Stanley Securities, comments that “The biggest reason for the decline in gross domestic product (GDP) is external demand was weak and domestic demand did not recover as quickly as we thought.”

France also could not escape the bad economic news because it was announced that the economy in the fourth quarter of 2012 shrank by 0.3%. Once more, the majority of economic analysts had not predicted such a steep decline even if some did go against the grain. Opinion is divided about the economy of France because some analysts are predicting a recession for this nation. However, the central bank of France believes that the first quarter in 2013 will witness economic growth – for now, only time will tell but either way it is clear that the economy is in a weak position.

In Germany the office for statistics stated “Comparatively weak foreign trade was the decisive factor for the decline in the economic performance at the end of the year: in the final quarter of 2012 exports of goods declined significantly more than imports of goods.”

The Eurozone remains blighted by negative economic news on the whole even if some positive signs have been announced by several member states. Yet in Germany and Japan you have a feeling that the economic malaise is bottoming out and that soon both nations will return to economic growth. In France the signals are mixed despite austerity measures by the leader of France and trying to make the job market more flexible. Therefore, the first quarter results of 2013 will provide a clearer picture for France, Germany and Japan respectively.

leejay@moderntokyotimes.com

http://moderntokyotimes.com

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