re sales in March from a year ago.
The Bank of Japan will conclude its first monetary policy meeting with new BoJ Governor Haruhiko Kuroda at the helm.
So far, Japan’s great “Abenomics” experiment – which seeks to employ bold policy tools to overcome more than a decade of deflation – has been mostly talk.
The US stocks rose on Tuesday, as factory orders data confirmed the economy is steadily improving.
The S&P 500 closed at another record high, though it fell short of breaking above its all-time intraday high of 1,576.09. The Dow also ended at another record high.
The U.S. government dropped plans to cut payments for private Medicare Advantage insurers and instead said it would allow a 3.3 percent raise. The news boosted shares of some health insurers, including Humana, which derives about two-thirds of its revenue from Medicare Advantage business.
March U.S. auto sales surged to their highest level in more than five years – with several makers reporting all-time records for the month.
Japan’s industrial sector is heavily dependent on imported raw materials and fuels. A tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self-sufficient in rice, Japan imports about 60% of its food on a caloric basis. Japan maintains one of the world’s largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been spectacular – a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession three times since 2008.
A sharp downturn in business investment and global demand for Japan’s exports in late 2008 pushed Japan into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake in March disrupted manufacturing. Recovery spending helped boost GDP in early 2012, but slower global economic growth began weakening Japan’s export-oriented economy by mid-year. Electricity supplies remain tight because Japan tentatively shut down almost all of its nuclear power plants after the Fukushima Daiichi nuclear reactors were crippled by the earthquake and resulting tsunami.
Newly-elected Prime Minister Shinzo ABE has declared the economy his government’s top priority; he has pledged to reconsider his predecessor’s plan to permanently close nuclear power plants and has said he will increase stimulus spending and press the Bank of Japan to loosen monetary policy. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2012 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. The new government will continue a longstanding debate on restructuring the economy and reining in Japan’s huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.