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Abenomics Trickle Down Stops At Big Firms

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Toyota Motor Corp (7203.T) is one of the conspicuous success stories of Japan’s radical efforts to revive its economy, with profits rebounding and its 60,000 workers in Japan hoping this year to receive their first base wage rise in six years.

But when the carmaker reports on Tuesday quarterly profits that are likely to be nearly five times what it booked a year ago, its continued revival will mask a much less optimistic mood among the auto industry’s smaller firms.

For them, the reflationary economic policies of Prime Minister Shinzo Abe, dubbed “Abenomics”, have failed to trickle down beyond the big carmakers, which are actually continuing to squeeze their networks of suppliers.

Pay rises are the last thing on their minds.

“Behind the recovery at the big carmakers is their pressure on suppliers to cut parts prices. It’s been hitting us like a body blow,” said a senior executive of a company that makes drivetrain-related parts for a major Toyota supplier.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza

@alfonso_forex

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