As I’ve been saying, the Japanese economy is shaping up, with evidence given in this report:
The [Japanese] government is no longer handing blank cheques to construction companies; in fact, it has been cutting public spending for the last two years. Japan’s growth, this time round, is led by the private sector.
Kakutaro Kitashiro, chairman of the Keizai Doyukai — a private, non-partisan business organisation in Japan — points out that this has happened because Japanese companies recognised that no more ‘stimulus packages’ were forthcoming from the deficit- and debt-ridden government, and that they had to take tough actions themselves.
Companies consequently slashed capacity, cut back on borrowings, shut down unprofitable businesses and laid off staff. They were helped by the fact that Japanese society became increasingly receptive to such measures — which in the past were no-nos, especially layoffs.
Which brings us to the second difference. This time, Japanese companies have truly restructured, the experts say — much like US companies did in the late 1980s and early 1990s — and the results have begun to show.
Operating profits of Japanese corporations — despite a decline in nominal GDP — rose 70 per cent in the fiscal year ended March, and are 30 per cent above their previous peak. They are, in short, leaner and meaner, and increasingly in the black.
