Japan savings rate turns negative; Russia scraps New Year holidays for ministers; Uganda takes on the chocolate market

1 Japan savings rate turns negative (Linda Yueh on BBC) For the first time since records were collected in 1955, Japan’s population is drawing down its savings and the savings rate, calculated as savings divided by disposable income plus pension payments, was negative 1.3%. It’s a dramatic change from when the Japanese saved nearly a quarter of their income (23.1%) when the savings rate peaked in 1975.

Japan had the highest household saving rate in the OECD in the 1960s until it fell to the lowest. After all, an aging population draws down savings and Japan is the fastest-aging country in the world; its population has been shrinking for a decade. It’s another blow to the Japanese Prime Minister Shinzo Abe. On the campaign trail, he said that Abenomics aimed to raise wages and employment to revive the economy and defeat deflation or price falls.

Yet, earnings (adjusted for inflation) dropped 4.3% from a year earlier in November. It’s the steepest decline since the 2009 global crisis and marks the 17th month of falls. Unsurprisingly, households are spending less. The average spend has dropped by 2.5%, which is the eighth consecutive drop – a trend that won’t help boost domestic demand and prices.

Inflation has clocked in at a 14 month low. There’s no price pressure on nominal yields on government bonds. The 10 year bond yield has fallen to a record low of below 0.3%. Such low borrowing costs will help the highly indebted country, but it also reflects an expectation that the economy and inflation won’t be getting going, and ultimately lead to rate rises.

One lesson to draw is that an aging population will dis-save, so high-saving countries now – like China and Germany – may soon find that they are heading down a similar road to Japan.


2 Russia scraps New Year holidays for ministers (San Francisco Chronicle) Russian President Vladimir Putin has scrapped New Year’s holidays for government ministers because of the unfolding economic crisis. Russian company employees are entitled to holiday from Jan. 1 to Jan. 12 when Russians celebrate the New Year, the main holiday in Russia, as well as Orthodox Christmas on Jan. 7.

Putin told a televised government session on Thursday that Cabinet ministers should not take this time off. “For the government, for your agencies we cannot afford this long holiday, at least this year – you know what I mean,” he said. Russia’s economy, battered by low oil prices and Western sanctions, is set to enter recession next year for the first time in six years, while the ruble is now worth less than half of its value.

The Russian Central Bank announced on Thursday that the country’s currency reserve has dropped below $400 billion for the first time since August 2009, as the government has been selling the currency on the market to support the ruble. The Central Bank in past weeks raised its key interest rate to 17 percent and said it will offer dollar and euro loans to banks so they can help major exporters that need foreign currencies to finance operations.

Many Russian companies have been locked out of Western capital markets following the sanctions imposed on the country for its involvement in Ukraine.


3 Uganda takes on the chocolate market (Khaleej Times) On a sprawling, lush cocoa plantation in Mukono outside the Ugandan capital Kampala, farmers have been sampling chocolate for the first time ever.

“When we gave our farm manager the first product to taste his face was so amazing, he was saying ‘really this is coming out from what we are doing?’” said Felix Okuye, 28, the executive director and co-founder of startup Pink Food Industries. In the east African nation, chocolate is a luxury product bought by people in the medium and upper income bracket.

The chocolate on the shelves of Kampala’s major supermarkets is usually from Switzerland, Belgium, Brazil, Malaysia and Turkey. However since May this year, Okuye and Pink Foods founder and CEO Stephen Sembuya have been selling their own “Uganda” brand of chocolate to Kampala restaurants and hotels who use it for deserts, pastries and in ice-cream.

Uganda is said to have about 20,000 hectares (50,000 acres) of land under cocoa cultivation, mostly in the country’s west and centre, but its fortunes in the industry have fluctuated over time as the government has focused more on coffee.

Charles Ocici, executive director of Enterprise Uganda, which provides business development services, including training, said the start-up was creating jobs while bringing technology and resources in terms of foreign currency resources into Uganda, therefore “improving the country’s overall economic strength.”

He said the entrepreneurs would have to work hard to break a “psychological barrier” relating to preconceived ideas Ugandans had about “good chocolate” coming from overseas. “You’ve got to be ready to give it a long-term or medium to long-term outlook,” said Ocici.“ But once they know how good a local product is they are on your side.”



About joesnewspicks

This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off — normally on Sundays — and does not appear when I am on vacation or busy.) I am a journalist for nearly three decades.
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