Japan's GDP below expectations
CNN's Maggie Lake speaks to Seijiro Takeshita about Japan's disappointing GDP numbers.

Earlier I spoke to Seijiro Takeshita, Director at an investment bank, Mizuho International, and I asked him how much pressure this puts on the Abe government.
We all know the reason why the numbers were bad is because of excessive imports on L&G and crude oil, and as you reported earlier, our nuclear activation is virtually zero, so imports were much stronger than expected. But what we are seeing is transition of the growth engine from the public sector into private sector, such as private consumption, especially capital expenditure, the business spending, so we are seeing the trend working out nicely. But that said, yes, there are lots of talks, as you just mentioned, that the Bank of Japan may have to comply with more demands from the government to basically, if the market continues, for example, to drop, for example, then, there would be more talks about that coming through.
You and I have talked a lot over this transition about the fact that a lot of it has to do with confidence. There seems to be finally confidence that Japan had turned the corner that maybe this recovery was gonna be different from the others. Is that confidence still in place?
Not totally, unfortunately, not. I think we have to wait until the latter half of the year and that is when we see the capital expenditure, that is the corporate spending coming back after all these consumption, tax-related volatilities’ over from around July-September period. If we see that, the investment will take place and then we will have the wage increase that will take place and the consumption. In other words, we’ll see the cycle of Japan coming back into a normalized state and when we see that, then yes, I think the confidence will definitely kick in, we are seeing signs of plateau of these things happening, but certainly, not exactly witnessing these factors yet.
Let’s talk a little bit about the disappointment on the export side. You mentioned the imports, the energy-related imports, on the export side, no country’s an island. Everybody is hit by what’s happening in the global economy and it’s seen that, in this case, Japan also feeling that volatilities from the emerging markets. We know the Euro zone is slow itself. Do you think this is just a temporary hit to exports or there’s something more fundamental going on with competitiveness in terms of Japan?
I don’t think the Japanese competitiveness is eroding, if anything, it’s rising, thanks to the weakening of the Yen, but as you just reported, as you just mentioned, the weakness in emerging nations was something that most Japanese experts had not expected. And one of the biggest negative factors for Japan is definitely these external factors. If we see, for example, slowing growth in emerging nations or a hiccup in many of the advanced nations as we saw two years ago, then of course, yes, that could jeopardize the comeback stages of Japan because for the capped expenditure, for the corps to come back, we have to see the first spearhead of the Japanese exporters doing that. So that will be a very big negative factors to watch carefully.
And Seijiro, let’s end with that third quiver, the third arrow in terms of reforms. Is there confidence that Abe and his government are gonna be able to push through and do what’s necessary? That was always gonna be the toughest pieces of the puzzle. Can they do it? Are they gonna be on track?
Let’s see what kind of legislation they can come up with in the next three months. That would give us a taste of what they’re gonna come up with. But the result, I would say, of the third arrow would take a lot longer than what most people anticipate. They markets anticipate for a year or two, but in my opinion, it will take a lot longer than that for structural transition to take place.