Jeremy Hobson: New figures out this morning show Japan’s economy is slowing down. It grew at a rate of 1.4 percent in the latest three month period. That’s down sharply from the previous quarter.
For more one what’s behind it, let’s bring in the BBC’s Mariko Oi. She’s with us from Tokyo. Good morning.
Mariko Oi: Good morning Jeremy.
Hobson: Well, so we’ve heard about a slowdown in Japan, in China, in Europe, in the United States. What’s unique about Japan in terms of its economy right now?
Oi: One big difference about Japan is that its economy is recovering from last year’s earthquake and tsunami. And part of the reason that Japan’s economy grew very strongly in the first three months of this year was because of the government spending on reconstruction. But we’re starting to see a slowdown in that. And even though the central bank — the Bank of Japan — has been hoping that consumers will continue to spend, today’s figures show that might not be the case, so it might be a bit of a worrying sign for the central bank.
Hobson: Well how are consumers feeling? I mean, they’ve been through so much economically in Japan in the last couple of years.
Oi: I spoke to one couple in their 50s and I was filing a report about the household budget. And they showed me a pie chart of their budget. They make quite a bit of money, but almost half the entire salary is spent on a housing loan, because they feel that they want to pay off the loan as soon as possible, just in case they need extra cash when they retire. Even younger people, I was having drinks with my girlfriends on Friday just after the bill to double the sales tax passed the parliament, their reaction was ‘that’s it I’m going to stop spending in Japan. I’m just going to go overseas and go shopping there.’ So, I guess that’s the concern that critics have of this particular bill because it seems like consumers aren’t spending as much as the government had been hoping.
Hobson: The BBC’s Mariko Oi in Tokyo. Thanks a lot.
Oi: Thank you, Jeremy.