Japan's biggest corporate earnings drop in 11 years

A government report published yesterday showed that the profits of Japanese companies during the first quarter of the fiscal year until June 30 last recorded their biggest annual decline in 11 years, after falling 46.6 percent to 12.4 trillion yen (117 billion dollars).

Meanwhile, a report issued by the Japanese Ministry of Finance showed that profits continued to decline for the fifth quarter in a row, as the Japanese economy stagnated.

Japanese corporate investment in the first quarter of the fiscal year fell 11.3 percent year-on-year to 9.6 trillion yen, while sales fell 17.7 percent to 284.7 trillion yen during the same period.

Japanese Prime Minister Shinzo Abe, who has gained popularity on the basis of his economic policy, announced last Friday his resignation for health reasons as the world's third-largest economy is in a state of historic stagnation.

During the first quarter of the current fiscal year, the Japanese economy recorded a record 27.8 per cent contraction, affected by the repercussions of the new coronavirus pandemic and the increase in consumption tax in Japan, with GDP continuing to contract for the third consecutive quarter. Any economy is in a state of official stagnation if it contracts for two consecutive quarters.

Moreover, data from the Japanese Ministry of Internal Affairs and Communications released yesterday showed that japan's unemployment rate rose in July to 2.9 percent from 2.8 percent in June.

At the same time, last July saw the write-off of 1.3 million temporary or half-time jobs compared to the same month last year, as this category of employment was hardest hit by the economic downturn and the emerging CORONA virus pandemic.

In late March, Japan imposed a state of emergency in all 47 regions of the country to contain the Corona pandemic. Since mid-May, the state of emergency has been gradually lifted from most of these territories until 25 December, with Tokyo and four other provinces being lifted.

This comes at a time when Japanese media reported yesterday that elections were held within Prime Minister Shinzo Abe's party to choose a successor on September 14, at a time when his adviser Yoshihide Suga is consolidating his position as the most likely to win office.

In fact, these internal elections will determine who will become the country's new prime minister. The vote in parliament a few days later is only a formality given that the LDP and its ally, The Komeito Party, control both houses of parliament, according to Reuters.

An official announcement by the Liberal Democratic Party (LDP) is expected today on the date of the vote.

The party first decided yesterday what form the internal elections would take a limited and concise process that would include only parliamentarians and local party delegates, i.e. about 535 voters in total.

In normal times, the election of the new leader of the Liberal Democratic Party includes all party members throughout the country.

Shunichi Suzuki, chairman of the General Council of the Liberal Democratic Party, explained that it would take two months to organize elections at this level, but given the prime minister's health, it is a very long two months. We can't take the process all this time."

Yoshihide Suga, 71, the current Secretary-General and spokesman for the Abe government and close to him, is expected to benefit from this limited voting formula.

Japanese media reported that Suga has the support of three groups within the party, adding that candidates for the post must register on September 8.