Key Japan economic index falls, government changes view to ‘worsening’

Japanese Prime Minister Shinzo earlier said he was ready to take ‘all possible steps’ if risks to the economy intensified following a sales tax hike and rising global uncertainty. (Reuters)
Updated 07 October 2019

Key Japan economic index falls, government changes view to ‘worsening’

  • Concerns have risen as the US-China trade dispute and slowing external demand dent Japan’s economic recovery
  • The last time the government gave a “worsening” assessment was for April data

TOKYO: A key Japanese economic index fell in August and the government on Monday downgraded its view to “worsening,” indicating the export-reliant economy might face slipping into recession.
Concerns have risen as the US-China trade dispute and slowing external demand dent Japan’s economic recovery.
The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, slipped a preliminary 0.4 point in August from the previous month, the Cabinet Office said on Monday.
The separate index for leading economic indicators, a gauge of the economy a few months ahead that’s compiled using data such as job offers and consumer sentiment, dropped 2.0 points from July, the Cabinet Office said.
The last time the government gave a “worsening” assessment was for April data.
The downgrade could add to speculation the government will hike spending, as Prime Minister Shinzo Abe on Friday said he was ready to take “all possible steps” if risks to the economy intensified following a sales tax hike and rising global uncertainty.
Japan rolled out a twice-delayed increase in the sales tax to 10 percent from 8 percent on Oct. 1. The move is seen as critical for fixing the country’s tattered finances but could tip the economy, hurt by the US-China trade war and weak external demand, into recession.
For April-June, Japan reported growth of 0.3 percent from the previous quarter. The last time Japan was in a technical recession, defined as two consecutive quarters of contraction, was the second half of 2015.
In recent months, the government’s assessment on the coincident index was that the economy likely stopped falling.
The government will later examine the economy comprehensively with professors and economists on a panel and officially define the country’s economic cycle.
Japan’s growth has slowed as the US-China trade dispute hit the country’s exports, sending big manufacturers sentiment — as measured by the Bank of Japan’s tankan survey — to a six-year low in the July-September quarter.
Market expectations for more policy easing by the Bank of Japan have increased after the central bank signaled its readiness to expand stimulus as early as its Oct. 30-31 meeting.


Saudi Arabia must plan carefully for ‘super cities,’ says strategist

Updated 22 November 2019

Saudi Arabia must plan carefully for ‘super cities,’ says strategist

  • Author and global strategist Parag Khanna held up Dubai as an example of a city that was making major progress in the drive to ”smart status”
  • In his recent book “Connectography,” he said that research by consultants McKinsey found that the minimum size for a “super city” was 4 million inhabitants

BEIJING: Saudi Arabia has the potential to develop “super cities” in the Kingdom, but must pay careful attention to the economic fundamentals behind such projects, according to global strategist and author Parag Khanna.

Speaking at the Bloomberg New Economy Forum in Beijing, Khanna told Arab News: “When you are building a city from scratch, you have to be certain of the plan. What is the economic master plan? How self-sustaining will the city be? What will people living there do for a living?”

The Kingdom is planning the mega-city NEOM on the northwest coast, as well as several other developments, under the Vision 2030 strategy to transform the economy.

Khanna, author of the recent book “Connectography,” said that research by consultants McKinsey found that the minimum size for a “super city” was 4 million inhabitants. In Saudi Arabia, only Riyadh had surpassed that figure in a single conurbation.

“The way to make up the difference is to create “smart” cities that will increase connectivity and living standards,” Khanna said. He held up Dubai as an example of a city that was making major progress in the drive to ”smart status,” adding “for the first time in a long time, other Arab cities are looking at another Arab city as a model of the kind of city they would like to live in, rather than a city outside the Arab world.”

Khanna said that he did not know enough about plans for NEOM and other Saudi projects to know whether they would be successful in reaching “super city” status. “I’d have to kick the tires,” he said, pointing to developments along the Red Sea coast like the King Abdullah Economic City and the regeneration of Riyadh as other potentially successful urban projects. 

Super cities are conurbations that drive economic growth and improvement in living standards. “Urbanization has been the single greatest factor in improving the human condition,” Khanna said.

The Arab world and South America have historically been urban dominated, but the drive to city building recently has gathered pace in China and India.