A veteran politician and long-time cabinet member, Yoshihide Suga takes the lead at a difficult time for the world’s third-largest economy.
Like many other nations, Japan is struggling with the coronavirus pandemic which has caused the biggest economic slump on record following years of economic stagnations.
Japan is also dealing with a rapidly ageing society, with nearly a third of the population older than 65.
Yoshihide Suga, 71, has served for years as chief cabinet secretary, the most senior role in government after the prime minister.
He has already promised to carry on much of the previous administration’s agenda, including the economic reform program dubbed Abenomics.
Born the son of strawberry farmers, Yoshihide Suga comes from a humble background that sets him apart from much of Japan’s political elite.
He only slowly within the political ranks. He first worked as a secretary for an LDP lawmaker before eventually embarking on his own political career, from city council elections to becoming a member of the Diet in 1996.
In 2005 he became a cabinet minister under Junichiro Koizumi and gained further influence in the subsequent Abe cabinet.
As Shinzo Abe’s right-hand man, Yoshihide Suga gained a reputation for being efficient and practical and the outgoing prime minister strongly supported his ally’s bid for the leadership.
Japan stock market traded low as the yen surged after the Bank of Japan decided against any extra monetary easing.
The Bank of Japan (BoJ) kept interest rates unchanged despite coming under pressure to take further action.
The central bank had introduced negative rates in January but this failed to provide a much needed boost for the economy.
The Nikkei 225 index finished 3.6% lower at 16,666.05. New economic data also showed a slip back into deflation while industrial production expanded.
Japan has for years been trying to boost its economy and end a period of stifling deflation.
One way to try to achieve this is by monetary policy, which is one of PM Shinzo Abe’s three key “Abenomics” policies to turn around the economy.
However, even negative rates – meaning commercial banks will be charged if they deposit money with the central bank – have not trickled down to get banks to lend more and companies and people to invest or spend more.
Inflation is still far off the 2% target.
The BoJ’s decision to hold rates also sent the yen currency soaring, which is likely to have a negative effect on the crucial export sector.
The yen rose nearly 2% against the dollar, with one dollar worth 109.33 yen.
The Japanese economy contracted by 0.4% in Q4 of 2015 compared with the previous quarter, official figures show.
Expectations for the numbers were for a quarterly contraction of 0.3%.
Weaker domestic demand, together with slower investment in housing, contributed to the disappointing numbers.
On an annualized basis, Japan’s economy contracted 1.4% during the period. That compares with expectations for an annualized contraction of 1.2%.
The annualized figure is the rate at which the economy would have contracted over a full 12 months had the December quarter been a reflection of the entire year.
PM Shinzo Abe’s plan to revive the economy – dubbed Abenomics – was introduced after his December 2013 election win.
Its aim was to combat deflation, which Japan has struggled with for nearly two decades, as well as boost demand and investment. It also wanted to weaken the yen, so helping big exporters like Toyota become more competitive.
However, growth has remained a concern. Analysts say Japan needs to ensure exports grow in order to support future economic growth – for every 1% that Japan’s economy grows, between 0.5 and 0.7% comes from exports.
Japan also relies heavily on domestic consumption but its population is ageing and shrinking so fewer people are contributing to the economy.
In Q3 of 2015, according to revised numbers, Japan avoided a technical recession. It has already been in recession four times since the global financial crisis.
Some analysts said February 15 numbers should be viewed in context.
“A single negative growth number should not be over-interpreted because the economy remains in rather good shape and continues to get strong policy support,” said economist Martin Schulz.
Investors seemed to shrug off February 15 growth numbers, with the benchmark Nikkei 225 jumping more than 4% shortly after the figures were released.
However, the benchmark shed more than 11% last week, which was a short trading week due to a public holiday on February 11.
Japan’s big exporters were particularly hard hit as a stronger yen against the dollar hurt investor sentiment.
The Bank of Japan (BoJ) has adopted a negative interest rate in a surprise move.
The benchmark rate of (-0.1%) means that commercial banks will be charged by the central bank for some deposits.
The BoJ hopes this will be a disincentive to banks to save and prompt them to lend in another attempt to counter the continuing economic slump in the world’s third-largest economy.
The eurozone also has negative interest rates, but this is a first for Japan.
It is a move that has been on the cards for Japan’s stagnating economy for well over 10 years.
The decision to go negative came after a narrow 5-4 vote at the Bank of Japan’s first meeting of the year on January 29.
“The BoJ will cut interest rates further into negative territory if judged as necessary,” the Bank of Japan said, adding it would continue as long as needed to achieve an inflation target of 2%.
Some analysts have cast doubt over how effective the rate cut will be.
In a press conference, the BoJ’s governor Haruhiko Kuroda said the weakening growth rate of the global economy was the main factor behind the move: “Japan’s economy continues to recover moderately and the underlying price trend is improving steadily… further falls in oil prices, uncertainty over emerging economies, including China, and global market instability could hurt business confidence and delay the eradication of people’s deflationary mindset.”
Earlier in the day, fresh economic data had again highlighted concerns over economic growth. The December core inflation rate was shown to be at 0.1% – far below the central bank’s target.
Asian shares jumped and the yen fell across the board in reaction to the announcement. Japanese banks though saw their shares drop on the news as lenders are likely to see their margins squeezed even more.
The decision comes in addition to the BoJ’s massive asset-buying program, which over the past years has failed to boost growth.
Japan’s Economy Minister Akira Amari has announced he is resigning amid corruption allegations.
Akira Amari unexpectedly made the announcement at a press conference in Tokyo on January 28.
He again denied personally receiving bribes from a construction company, as had been alleged by a Japanese magazine.
The development will be seen as a significant blow for PM Shinzo Abe.
Akira Amari, who has been minister of state for economic and fiscal policy since late 2012, has been widely described as one of Shinzo Abe’s most trusted members of parliament.
As Japan’s lead negotiator for the Trans Pacific Partnership (TPP) agreement, Akira Amari was expected to travel to New Zealand next week to sign the agreement.
He was also regarded as the architect of Abenomics – Shinzo Abe’s plan to pull the world’s third largest economy out of deflation.
Akira Amari will be replaced by Nobuteru Ishihara, formerly the country’s environment minister.
A local magazine had reported last week that Akira Amari and his aides were given money and gifts worth some 12 million yen ($101,000) by a construction company in return for some favors linked to land ownership.
Akira Amari said he did receive money which he wanted declared as a political donation, however, he said some of it was mishandled by his staff.
Japan’s economy, which has been struggling with deflation for nearly two decades, avoided a technical recession in Q3 of 2015.
“Japan is finally emerging from deflation,” Akira Amari told the press conference, as reported by Reuters.
“We need to pass legislation through parliament for steps to beat deflation and create a strong economy as soon as possible.
“Anything that hampers this must be eliminated, and I’m no exception,” Reuters reported him as saying.
“I, therefore, would like to resign as minister to take responsibility [for what my aide has done],” he said, according to Reuters.
Akira Amari is the fourth member of Shinzo Abe’s cabinet to resign amid allegations of bribery, among other issues.
Pm Shinzo Abe has apologized for the latest resignation.
Asian stock markets were mostly lower on September 10 as economic data from Japan and China made investors cautious.
After surging almost 8% on September 9, Japan’s Nikkei 225 index closed down 2.5% at 18,299.62, among Asia’s big losers.
Worries about a slowdown China and the impact of a US interest rate hike also dented investors’ confidence.
Analysts said losses were to be expected considering Wednesday’s significant gains – particularly in Japan.
Core machinery orders in Japan, which are a key indicator of capital expenditure, fell by 3.6% in July compared with June.
The renewed decline suggested that business investment may fall yet again this quarter, economists said.
In Australia, the S&P/ASX 200 closed down 2.4% at 5,098.40, following Wall Street lower and after two sessions of gains.
The Australian dollar fell together with the New Zealand dollar on Thursday after New Zealand’s central bank cut interest rates to 2.75% and said it may introduce further easing measures to boost its flagging economy.
In China, the benchmark Shanghai Composite ended down 1.4% to 3,197.89, while Hong Kong’s Hang Seng lost 2.6% to 21,562.5 points.
Official figures released on September 10 showed China’s consumer price index (CPI) unexpectedly rose to 2% in August from a year ago marking a one-year high.
The rise was due to higher food prices. Pork prices, which weigh heavily on consumer prices in China, rose from 16.7% last year to 19.6% in August.
China’s producer price index (PPI) fell 5.9% – marking its 42nd consecutive month of declines – and the biggest drop since 2009.
The one bright spot in Asia was South Korea’s Kospi which closed up 0.7% to 1,947.30 points.
Japan’s stock market closes up almost 8% on September 9 in its biggest one-day jump since late 2008.
Nikkei 225 index closed up 7.71% at 18,770.51 points.
On September 8, the benchmark index saw all the gains it had made this year wiped out.
Remarks by newly re-elected PM Shinzo Abe suggesting company tax cuts were on the way helped the mood.
Also positive were September 8 rebound for US shares and an improving Chinese share market.
Investor sentiment was up across the rest of Asia.
Tuesday’s weak economic data from China has also raised hopes of more stimulus for that economy and its markets.
Hong Kong’s benchmark Hang Seng index finished up 4.1% at 22,131.31 – marking its biggest one-day percentage gain in almost four years.
China’s government said on September 9 that it would strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system to support the economy.
On the mainland, the Shanghai Composite closed up 2.3% at 3,243.09 – moving into positive territory for the year.
In Australia, the S&P/ASX 200 closed up 2.07% at 5,221.10, taking its lead from US markets.
Analysts said resource and commodity shares, together with some of the big bank stocks, had buoyed the Australian index.
Numbers out on September 9 showed consumer confidence slid in September which led to revived hopes of another rate cut by the Reserve Bank of Australia.
South Korea’s Kospi benchmark index also closed up 2.96% at 1,934.20 points. Official data released on September 9 showed the country’s latest unemployment figures for August sitting at their lowest since January this year.
Japan stock market closed higher for the first time in four days, spurred by a rally on Wall Street.
US shares snapped a two-day losing streak overnight, rebounding from Tuesday’s steep losses as the S&P 500 and Dow Jones rose nearly 2%.
An upward revision in US productivity data ahead of the jobs report on September 4 boosted sentiment among investors rattled by slowing growth in China.
Photo AFP/Getty Images
Japan’s Nikkei 225 index closed up 0.5% to 18,182.39 – leading Asian gains.
Chinese markets are closed on September 3 and 4 for a holiday to commemorate the end of World War II.
In Australia, the S&P/ASX 200 index ended down 1.3% at 5,035.70. Shares in department store operator Myer Holdings dived 24% after it announced plans to raise 221 million Australian dollars ($154 million) through a rights issue.
In South Korea, shares closed flat after revised second quarter growth figures came out in line with earlier estimates released in July.
The country’s economy grew a seasonally-adjusted 0.3% from April to June from the previous three-month period, while it expanded 2.2% from a year earlier.
South Korea’s benchmark Kospi index finished at 1,915.53.
On December 2, Japan’s Nikkei 225 index closed at a fresh seven-year high as investor sentiment was buoyed by talk of the Bank of Japan (BoJ) buying stocks.
The benchmark Nikkei 225 closed up 0.4% at 17,663.22 points.
Earlier, the index had fallen after Moody’s Investment Service cut Japan’s credit rating by one notch to A1 from Aa3.
Moody’s move underlined concerns over Japan’s economy after an increase in the national sales tax was delayed.
However, analysts said the weaker yen, together with the possible move by the BoJ, was continuing to support investor sentiment.
China shares rallied on speculation that the country’s central bank was preparing to reduce bank reserve requirement ratios sooner than expected on recent economic data showing a much weaker economy.
In Hong Kong, the Hang Seng index closed up 1.2% at 23,654.30, while the Shanghai Composite rose 3.1%, to 2,763.54 – its best daily rise since September 2013.
Australia’s benchmark S&P/ASX 200 index closed up 1.4% at 5,281.30 points.
The upward movement in Australia followed the biggest fall since October 10 on December 1 amid a sell-off in mining and energy related shares.
Ahead of economic growth figures due out on December 3, the Australian Bureau of Statistics (ABS) reported on December 2 that net exports had added 0.8 percentage points to gross domestic product (GDP) in Q3.
The quarterly rise in exports for the three months to September is a sign that GDP data due out on December 3 will be positive.
As expected, Australia’s central bank maintained its record low official interest rates at its monthly meeting on December 2.
The bank’s interest rate has been at 2.5% since August last year.
In South Korea, the benchmark Kospi was little-changed, closing up just 0.03% at 1,965.83 points.
Japan has announced its plans to cut the country’s corporate tax to below 30% in several stages starting 2015.
The move is part of PM Shinzo Abe’s plan to revive Japan’s economy, a pledge made when he took office in December 2012.
Japan’s corporate tax rate, at nearly 36% for large companies operating in the capital Tokyo, ranks among the highest in the industrialized world.
The latest move has been dubbed as Shinzo Abe’s “third arrow”.
The first two arrows launched last year and focused on using fiscal and monetary policies to turn the economy around.
Details in terms of how the tax cut will be implemented are yet to be revealed by the Prime Minister’s office.
Japan plans to cut the country’s corporate tax to below 30 percent in several stages starting 2015
Shinzo Abe’s previous economic reform measures included working with the country’s central bank, the Bank of Japan to embark on an aggressive quantitative monetary easing policy, through monthly bond purchases.
That helped drive down the value of the Japanese yen against the US dollar, and helped to benefit Japanese exporting companies, such as the automakers.
The central bank has also set an inflation target of 2%, which it hopes to achieve in a few years’ time.
Japan had been battling deflation, or falling prices for nearly two decades. But that may be changing, as prices have been rising over the last several months.
That was helped by a raise in sales tax in April this year, to 8% from 5%.
That’s the first increase in the sales tax, in 17 years. And it will rise again to 10% in October 2015.
The gradual increases in the sales tax are aimed at covering rising social welfare costs linked to Japan’s ageing population.
Japan currently has one of the lowest birth rates in the world.
It also has the world’s highest ratio of elderly to young people, raising serious concerns about future economic growth.
Shinzo Abe also said he would end compulsory overtime payments for workers earning over 10 million yen a year and raise the proportion of female managers to 30% by 2020 from last year’s 7.5% rate.
However, economists warned it would be years before Japan benefitted from the planned changes.
“Various legislation must be enacted and it will take time for companies to begin to act. Therefore, it will be 10 to 20 years before the potential growth rate rises,” said Kenji Yumoto, vice chairman of the Japan Research Institute.