May 28, 2015
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2015 May 27 - June 2 [ECONOMY]
Weak yen hurts small domestic businesses and household budgets |
Many Japanese automakers which increased their profits moved production outside Japan even further. Since the consumption tax went up in April last year, domestic car sales have been sluggish.
Toyota Motor Corporation, for example, increased its operating profits by 458.4 billion yen (20.0%) to 2.75 trillion yen in 2014. Of the 458.4 billion, 60% was exchange-rate-gains from the cheap yen. Its net profit jumped to 2.17 trillion yen. This car giant became the first Japanese company that surpassed two trillion yen in net profits.
By comparison, the 2014 diffusion indices on SMEs indicate a downward trend in sales volume and business conditions for 12 consecutive months.
According to Japan’s largest corporate research provider Teikoku Databank, 35 SMEs went bankrupt in April alone due to factors related to the weak yen, up 52.2% from the same month in the previous year. This marked the 16th consecutive month of increase in bankruptcies since Teikoku Databank started the weaker-yen-related bankruptcy reporting in January 2013. Concurrently with these business failures, consumer spending has been dropping for 12 months in a row (data released by the Ministry of Internal Affairs).
Prime Minister Abe Shinzo’s easy-money policy has accelerated the depreciation of the yen. If nothing is done now, a lower yen will be a make-or-break issue for SMEs in Japan and for people’s household finances.
Past related articles:
> JCP Majima: Toyota makes huge profits by exploiting subcontractors [March 3, 2015]
> Abenomics brings about zero GDP growth [February 17, 2015]
> SMEs remain stagnant: business circles’ data [February 14, 2015]
> JCP Kokuta demands shift in economic policy [January 28, 2015]
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