Some basic data [latest]

==Latest GDP growth 3.0% trend slowing
==GDP growth expected for 06 2.3%
==Industrial Production growth 1.2%y/y
==Unemployment 9.05 4.2%
==trade balance positive $102bn trend decreasing
==Current account positive $111bn trend strongly decreasing
==Budget balance 05 negative 6.1% of GDP

Short news

== LDP drafted a change in the constitution which will if accepted help to make Japan again a military power.

== The big police issue in Japan concerns the size and role of the state. Spending is not high by global standards : 37% of GDP in 2004, more than in US, but lower than in UK and far lower than in continental Europe. The problem lies in the composition of the spending, the size of the budget deficit (6.4% of GDP.) and the way the state interferes in the economy in other ways.

== Japan's economy for the second quarter of 2005 showed healthy capital spending and consumption along with a brighter picture for exports. It was the third straight quarter of growth good news for the government, which is seeking voter approval in September. Economists have been also encouraged by science that deflation may be easy.

==Domestic demand has replaced exports as the main engine of growth this year as global demand for Japanese goods is slowing notably in China. Further the good news inventories fell. All figures confirm that the Japanese economy continues to recover moderately.

== Reported its April trade balance, and its surplus rose from March on the back of stronger exports.

== Structural reforms will increase efficiency of investment and growth potential compensating for a fall in the growth of exports to the US.

== Quantitative easing policy will remain in place until deflation is firmly beaten.

== Structural fiscal deficit stays with 6.4% of GDP in 05 high.

Economic recovery in Japan at last gathering force

After 10 years Japan looks rejuvenated. Companies made bumper profits since 2002 helped by strong global demand and heavy investments mainly in China. Japan banks, which played a central role in its long stagnation, are healthier than ever in the last decade.

This momentum is starting to feed through to Japan's labor market. Full time employment has risen sharply this year, which will help consumers spending. Growing domestic demand will allow its economy to begin rising of its own accord, without relying too much on exports means the global economy.

How did the turn around start?

Over the past 3 years Japanese companies boosted spending to new plants and equipment as makers of cars, electronics and other items increased investments especially in China. Those companies then began buying more Japanese components and materials for their overseas factories. The resulting demand began to boost revenues. As firms had cut costs sharply, their profit margin began to rise sharply. Those higher profits sustained for the last 3 years, now have changed everything. As they continued to rise spreading from big manufacturers to smaller ones many companies earlier near to bankruptcy are now able to pay their debts. The longer this profit boom continued, the healthier it became also for the banks. Their non-performing loans went down from 8.7% in 2002 to 2.9% now. That's quite a development and it encourages the banks to lend more and is thus supporting growth.

The firms, which survived, are fitter and start to invest in Japan again. And hiring starts also.. This is not so much to be seen in the unemployment rate which went down from 5.4% at the peak to 4.4% now, but in the structure, as part time jobs are substituted by full time jobs. Wages are starting to rise and higher spending will follow. In short Japan is entering a new phase of sustainable economic growth.

Saving in Japan

For much of the last 20 years Japan had a big savings surplus and a big drop in its capital exports could quickly end the global savings glut. With only a handful of exceptions Japan has run a saving surplus every year since late 1960s, but its underlying saving and investment patterns have varied. Back in the 60's Japan was a young fast growing economy with high investment rates and even higher saving rates.

Today it is a low saving country. Trouble is investment is even lower. While in the 60s Japan was growing rapidly with little consumer credits and little pension provisions, none of this applies any more. Consumer credit is widely available and pensions are save. The share of pensioners in relation to the population is only higher in Italy and Sweden. Household savings plummeted. From a peak of 23% of disposal income in 76 it has fallen to 6%..

Even though the government has the highest debts worldwide and household savings are falling the corporate sector is saving more then ever. Why? They are not investing. But now the mood seems to change. The economy is growing at a respectable rate. After 10 years corporate balance sheets are looking healthy. The banking system has been cleaned up. Firms are beginning to hire again and wages are picking up. The jobless rate is lowest since 7 years. All this suggests that domestic investment could recover.

Seniors in Japan an important economic factor

Japan leads the world in developing new products for seniors. By 2015 around 25% of the Japanese population will be above 65. With 25000 people above 100years old Japan has the largest number of people above 100 worldwide. It’s average life span is now 82 and growing. Other countries are afraid of such a development as the number of working population to the overall population will decrease significantly. But in Japan it seems to be a blessing in disguise, as businessmen see elder Japanese as a source of business and profit and the high technological standard of Japanese companies secures a high productivity up to now absorbed in exports.

One of the biggest challenges is the provision of affordable care for the seniors including the great majority still able to live at home, but no longer with their children. Bringing in affordable nurses and caregivers from other countries is in Japan no option as the government restricts immigration heavily.

So true to form Japanese businesses develop high tech responses. Medical treatment over internet is one of the latest developments. If children want to know, if their parents are still okay, no problem. Devices are there that can be placed for example at the fridge and as long as the fridge doors are opening regularly it means that the parents are l going on. How are signals send? Well, usage records are sent to mobile phones or email addresses of friends and relatives.

A lot of work is done on interactive robots that talk to the seniors. Those on the market are chiefly for comfort and stimulation and chatting on topics like weather. They also sing and play quiz games.
But increasingly the development work on robots is designed either to assist with physical functions such as bathing or lifting things, or to monitor health and well being. Business expects turnover of such robots to reach in the next 10 years a volume of $9bn, not a small amount and spent mainly by elders.
The goldenager market is also coming up in the mobile phone sector. While Japanese mobile phones for youngsters are highly sophisticated, mobiles for seniors are just the opposite. They are construed in a very simple way and these mobiles are looking like the traditional phones.

Not only live the Japanese seniors the longest but also the healthiest. So once the time comes to say good bye to the world, they are not so much going to die in their beds, but to go in great number to places like “pokkuri dera temples” dedicated to the idea of going to sleep for good. Aldous Huxlays “Beautiful New World” written in the 60s is greeting you.

The implications for business are that healthy Japanese pensioners are living their lives for longer and have consumption patterns similar to those of youngsters, although their spending focuses more on services than on goods consumption. They have a lot more time and money than the younger generation. And as the need for support from the elders for the youngsters is disappearing goldenagers will have even more resources.

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