Abenomics to Rule Japan

From Page 1

According to Financial Times, Sunday’s result will be read as an endorsement of Abe’s expansionary economic policies, which have lifted the stock market and aided export-dependent manufacturers by reversing a six-year appreciation of the yen.
In exit polls, 72 percent of respondents told NHK they approved of the premier’s handling of the economy.
Abenomics’ most tangible features so far have been increased government spending and a dramatic loosening of monetary policy by the Bank of Japan.
Abe has also sketched out a national growth strategy that includes wide-ranging structural reforms and deregulation, but details of many of his initiatives have been scarce so far. A more concrete set of proposals has been promised for September.
“We’ve argued that our economic policies aren’t mistaken, and the public gave us their support. People now want to feel the benefits. The economy indeed is improving,” a weary but confident-sounding Abe said at LDP headquarters late on Sunday after his ruling coalition’s victory was assured.
“We’d like to do our best to generate a positive cycle--in which job conditions improve and wages rise, boosting personal consumption and prompting companies to invest more--as soon as possible,” he added.

Issues to Contend
Among the contentious issues that the premier will now have to navigate with majorities in both houses is the Trans-Pacific Partnership free trade talks that Japan will join this week.
Abe has vowed to maintain a range of agricultural tariffs to protect Japan’s farmers, but influential rural voters have remained skeptical, and in some farm communities Abe’s support rate is half the national average, Wall Street Journal reported.
The government will also have to decide whether to go ahead with the sales tax hike in April 2014--and again in October 2015--as planned. A nationwide tax hike of consumer goods and services is sure to be a factor that will weigh down Japan’s economic recovery.
Meanwhile, some including Japanese businesses with a big stake in the matter, worry the hawkish leader will shift to focus on the conservative agenda that has long been central to his ideology.
That agenda includes revising the postwar pacifist constitution, strengthening Japan’s defense posture and recasting Tokyo’s wartime history with a less apologetic tone.
For now, many experts suggest, Abe is unlikely to turn his back on economic matters as he tries to beef up his so-far disappointing economic reform plans. He also confronts a decision on whether to go ahead with raising the 5 percent sales tax to 8 percent next April, part of a planned doubling by October 2015 aimed at reining in Japan’s massive public debt.

Turnout Slides
Turnout tumbled in the election, which coincided with the first weekend of school holidays.
Kyodo News estimated the share of voters casting ballots at 51.57 percent, down from 57.92 percent in 2010, and reported that the final figure could be the lowest since 1998, Bloomberg wrote.
It’s not like there’s a groundswell of enthusiasm for him, Koichi Nakano, professor of politics at Sophia University in Tokyo, said in reference to Abe. If he misreads that and gets complacent, he could be punished very quickly in Cabinet support levels.
Support for the main opposition DPJ collapsed, and party secretary-general Goshi Hosono, a former environment minister, said he bore responsibility for failing to restore public trust in the party. He nonetheless criticized Abe’s record.
It’s true that there have been gains in terms of share prices, but that means nothing if it does not lead to stable employment and incomes, Hosono told NHK.

Reform Agenda
Abe must walk a fine line to avoid disappointing investors with tepid measures or sparking dissent among allies with bolder moves. Economists including Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co., have called for Abe to cut corporate taxes, loosen labor regulations to make it easier to fire workers and tackle the world’s biggest debt.
Slowing economic growth may stir concern among LDP lawmakers and limit support for more painful measures to end a decade-long deflationary malaise. Growth will ease to an annualized 2.8 percent in the three months through June, compared with 4.1 percent in the first quarter, according to a survey of 29 economists by Bloomberg.
“We’re not going to see anything dramatic,” Feldman said. It’s not flashy stuff, it’s small step-by-step actions.”

Sales Tax
Speaking on Asahi TV after polls closed, Abe said a decision on whether to carry out a rise in the sales tax was difficult and he would closely examine the April-to-June economic data before making a decision.
The LDP and New Komeito agreed with then-ruling DPJ last year to increase the sales tax to 8 percent in April 2014 from the current 5 percent.
The prime minister has confronted the agriculture lobby within his own party by taking Japan into talks on the Trans-Pacific Partnership trade deal. Japanese negotiators are set to join the discussions two days after the election.

Russia Will Be Europe’s Largest Car Market

The Russian automobile market is poised to overtake Germany and become Europe’s largest by 2016, and the world’s fifth biggest, by 2020, according to a new report.
A growing middle class, an increase in car ownership, low fuel prices and Russia’s expanding economy are factors that will drive the Russian car market, according to a forecast by the Boston Consulting Group, RT reported.
“Fundamentally, it’s an attractive market in terms of cars per thousand inhabitants and therefore we are bullish long-term--but that doesn’t mean that every year will be a good year,” Ewald Kreid, an author of the report and partner at BCG in Vienna, said.
Russia’s auto market is slated to grow by an annual rate of six percent through 2020, when annual sales will reach 4.4 automobiles and Russia will become the world’s fifth largest automobile market, by volume of sales.
The report forecasts emerging markets will dominate global car sales by 2020, and will account for 65 percent of global sales, more than double 2000.

Emerging Economies Gain More Clout

Global commerce is being reshaped in favor of emerging powers like China and other developing nations, with the trend set to continue apace, the World Trade Organization said.
“The world is changing rapidly, hence the world of trade is changing rapidly,” WTO Chief Pascal Lamy said as he released the Geneva-based body’s annual report.
The study showed that between 1980 and 2011, developing economies raised their share in world exports from just over one-third to almost half, and their share of imports by a similar proportion, AFP reported.
“The core trend that comes out of this pretty clearly is how new players have risen to prominence,” said Patrick Low, chief economist at the WTO.
The report forecast that developing countries could outpace developed economies in terms of both export and gross domestic product growth by a factor of two to three over the next two decades.
“It’s the emerging economies which have the show,” said Danny Quah, a professor from the London School of Economics, at the report’s launch.

Spain’s Loan Rate Rises

Spain’s Loan Rate Rises
Spanish banks’ bad loan ratio rose to 11.2 percent in May from 10.87 percent in April, according to data released by the Bank of Spain.
Loans that fell in to arrears increased by €3.14 billion ($4.11 billion) since April to €170.2 billion in May, Xinhua reported.
In annual terms, the bank said bad loans increased by €14.2 billion compared to May 2012.
Spain’s total credit portfolio fell from €1.54 trillion in April to €1.52 trillion in May, while experiencing a 12.7-percent decrease in comparison with May 2012 when Spanish total credit portfolio reached €1.74 trillion.
The non-performing loan rate peaked at 11.38 percent in November 2012 but decreased in December and February 2013 thanks to the Spanish bad bank (SAREB).
SAREB took toxic assets from those entities needing the European Union’s financial help, reducing a big proportion of assets from the real estate sector of Spain’s housing bubble that burst in 2008.
Experts expect the non-performing loan rate will increase in the following months as unemployment is not expected to decrease in the medium term.

Takab Exports Honey To Persian Gulf States

Economy Desk

Over 60 tons of premium honey were exported from Takab, West Azarbaijan province, to Persian Gulf littoral states in the last Iranian year (ended March 20, 2013), said the head of Takab Agricultural Jihad Department.
Mohsen Taheri put the value of exported honey at 7 billion rials.
He explained that Takab’s honey is of high quality, adding that launching processing industries and packaging units in this northwestern city is of high importance.
“This can generate jobs for youths and promote agricultural sector,” he said.
“Currently, there are 37,000 honey bee colonies in the city.”
He put Takab’s annual milk production at 15,000 tons, which are used for producing cheese in 60 workshops.
Takab has a population of 80,000.
Iranian honey is among the best in the world because of the country’s climatic conditions. There are about 4.36 million beehives in the country from which about 48,000 tons of honey are extracted every year. There are 60,000 bee keepers nationwide.
The value added of this business is 143 times as much as agro activities. Bee keeping yields profit quite rapidly and do not need a high initial capital and hence the youth and/or retired people could engage in this activity.
Moreover, bee keeping helps protect the natural ecosystem and has an undeniable impact on the quality and quantity of production of fruits nationwide.
Bee keepers go to various parts of the country and hence displace their beehives nationwide. For instance, five beehives in an apple garden can increase productivity significantly.
Some 90 percent of pollinating in nature are done by insects and bees.

Khuzestan Exports 6,000 Tons of Date Seeds

Economy Desk

The southern province of Khuzestan has exported 6,000 tons of date seeds since September 2012.
Announcing the above, Ali Khezri, the deputy head of the province’s Date Exporters, Producers and Packagers Union, said the seeds were destined to Bahrain, UAE and Kuwait for feeding camels.
“Importers from Arab states travel to the south of Iran, which is the hub of date production and purchase date seeds for livestock industry,” he said.
The official also noted that about 2,000 tons of unusable dates, damaged in the process of packaging, are annually exported as livestock feed.
“Each ton of industrial dates earns $500 while each ton of date seeds earn $300,” he said.
Iran annually exports 14,000 tons of date seeds to Arab states, a large portion of which originate from the southern provinces of Khuzestan and Bushehr.
Date seeds are full of protein and mineral products that can earn huge foreign exchange revenues for the processing industries.
Establishing processing industries in the field of date production can generate jobs across the nation and also turn date seeds into a lucrative export commodity.
Date seeds are soaked and grounded for animal feed. Their oil is suitable for use in soap and cosmetics. Date palm seeds contain 0.56–5.4 percent lauric acid. They can also be processed chemically as a source of oxalic acid and are burned to make charcoal for silversmiths.
The seeds are also ground and used in the manner of coffee beans, or as an additive to coffee.

Jordan’s Budget Deficit

Jordan’s budget deficit reached 459. 9 million dinars (about $643.8 million) in the first five months of 2013 compared with the same period of 2012.