Larger Japanese trade deficit but senior spending lifts economy
Japan has been reporting a larger than expected trade deficit in July because of slowed exports (-8.1 %) due to Europe’s debt crisis and faltering global growth, but also exports to China fell 11.9 % and the trade deficit with China amounted to JPY 250.1 billion. On the other hand senior spending gives Japan’s economy a lift
Japan’s trade deficit is almost double of what experts were expecting. In July it amounted to JPY 517.4 billion (around USD 6.53 billion), in June resulted a surplus of CNY 60.3 billion.
As we all know Japan has large bracket of an aging population, 24 % of the population is now over 65 and there will be 40 % by 2060. Japanese families count also less children, thus the two factors combined are hampering Japan’s growth potential and put pressure on retail prices.
Now there are indications that seniors have been stepping up spending and thus giving the economy a lift. Japanese Japan’s households headed by individuals age 60 or older accounted for more than 40 % of consumption in 2011, in 2000 the figure was 33 %. On the other hand, spending by those under 40 is declining taking into account their uncertain income outlook. Domestic spending and reconstruction were the main growth divers.
The senior market is earmarked with around JPY 100 trillion (USD 1.27 trillion) annually and many products are especially designed for this market segment. According to a recent survey those born between 1946 and 1950 revealed that they would spend more time and money on hobbies and would refrain from being extravagant.
According to a report in Wall Street Journal, among the specials services offered particularly to the aging population is to be found an offer by SevenEleven (convenience stores), its staff delivers items ordered by phone to the customers’ homes and by using Toyota mini-electric vehicles. The chain’s operator Seven & I Holdings could expand its customer base: 30 % of the customers were over 50 in fiscal 2011, compared with 12 % under 20. This contradicts with the general perception that convenience stores are catering mainly to youngsters.
The older generation becomes also more and more familiar with the digital world and therefore e-shopping will become a new option. The internet use by those over age 60 rose in 2012 to 57 %, in 2005 the figure was 25 % and in 2000 only 4.5 %, states a survey by Dentsu Innovation Lab. Almost 60 % of the elderly persons surveyed stated that they enjoy shopping online, especially to purchase gifts for grandchildren or to buy antiques at auctions.
Japan’s biggest e-commerce company Rakuten Inc. has set up an online shopping portal for seniors, encouraging them to buy items such as anti-aging cosmetics, health food and luxury fashion goods.