Pity poor Japan, our second major trading partner.
At a time when it needs stable, consistent leadership from its politicians, this week has seen infighting in the government and an opportunistic no confidence motion in Prime Minister Naota Kan from the still bitter Liberal Democratic Party opposition that has gone close to forcing a change of government.
The political instability comes as there are new signs the country’s rebound from the damage caused by the March 11 quake and tsunami is gathering pace.
At best it has forced Prime Minister Kan to indicate that he may step down at some point in the future, as a way of trying to head off the motion after members of his own party and coalition government deserted him to support it at the instigation of a corrupt former leader of the Democratic Party of Japan.
Mr Kan reportedly offered to hand over power after overseeing reconstruction efforts related to the earthquake, tsunami and the consequent nuclear crisis, but that was later denied.
Kan’s Democratic Party of Japan controls enough seats to easily defeat the motion, though some within his own party are expected to back it.
That didn’t happened and the vote was easily beaten back by Mr Kan’s DJP
The political jockeying ignores the damage it might do to confidence in Japan as the recovery takes shape.
Bank of Japan Governor Masaaki Shirakawa said on Wednesday that supply disruptions caused by the March 11 events are easing more quickly than expected.
He told a conference in Tokyo that he now thinks the economy will return to moderate growth in the second half of this fiscal year.
While production and exports plunged in late March and April after the quake, tsunami and the Fukushima disaster, the supply bottlenecks are "being relaxed more quickly than expected initially as a result of strenuous efforts by firms," Mr Shirakawa told an international conference held at the bank’s headquarters in Tokyo.
Although Mr Shirakawa said he still believes the Japanese economy will stay under "strong downward pressure" in the short term, he revealed more optimism about the period from September onwards.
"As supply-side constraints ease and production regains traction, the economy is expected to return to the moderate recovery path from the second half of fiscal 2011, backed by an increase in exports reflecting the high growth of the global economy and by a rise in demand for restoring capital stock," he added, according to Japanese media reports yesterday.
Figures this week support him.
While industrial production only rose 1% in April (half the earlier forecast), Japanese companies expect to boost production by a much sharper rate in May and June – by 8% and 7.7% respectively.
The May estimate is up from a 2.7% figure given a month ago and indicates manufacturers are becoming more confident.
The quake and tsunami plunged the economy into the red in the March quarter, pushing annual growth down 3.7% (0.9% quarter on quarter).
Exports dropped 12% in April because of the fall in cars and electronics parts.
But the impact of the expected summer power shortages will hold back the economy and prevent a surge in output until later in the year, which is what Mr Shirakawa is now saying.
And Toyota Motor produced its 2011-12 production forecast this week that also supports the contention that the country’s recovery is faster than expected.
Restoration of its factories in Japan in the wake of the March 11 disasters has been faster than had been expected.
Now the car giant says it expects to produce more than 7 million cars globally in the business year that ends next March.
The figure is about the same level as its output for the 2010 business year.
Toyota aims to restore its output to the pre-disaster level in August (it was originally thought to be the final quarter of this year).
By raising production in and after September, it intends to increase its daily output to about 14,000 cars in December, 2,000 more than originally planned.
It may take a little while before Toyota fully revives its production in North America, but it will restore output in China in July as planned.
Japan’s car exports in April fell at the fastest pace on record. Carmakers had to slash production and exports, due to parts supply disruptions following the March 11 disasters.
The Japan Automobile Manufacturers Association says April exports of cars, trucks and buses totalled 126,000 units, or down 67% year on year.
Shipments to all regions went down. Those to North America plunged 69%, the largest fall for the month.
Asia showed a drop of 60% and Europe 57%. (And as the separate trade story shows, there was a big fall to Australia, according to the ABS figures.)
The missing pieces from this week’s employment data for April were the figures from the quake and tsunami devastated areas of north eastern coastal Japan.
Japanese unemployment edged up to 4.7% in April from 4.6% in March, with only a small rise in the number of jobless reported.
But a Japanese government survey on Wednesday showed that more than 114,000 people have lost their jobs since the earthquake and nuclear accident in the three main affected prefectures.
The labour ministry says that as of last Thursday, public job placement offices in Iwate, Miyagi and Fukushima prefectures had issued jobless certificates to 114,608 people to qualify for unemployment benefits.
The number is about three times larger than the same period last year in the prefectures.
