Japan Economics Weekly Deflationary threat far from over The Bank of Japan’s preferred measure of underlying inflation fell to a fresh low in December. While the weaker exchange rate and the recovery in commodity prices should result in a rebound in coming... 10th February 2017 · 1 min read
Japan Economics Weekly Tight labour market finally boosting incomes There is growing evidence that the tightness of Japan’s labour market is finally feeding into faster growth in incomes. This should support stronger private consumption at least until inflation... 3rd February 2017 · 1 min read
Japan Economics Weekly Will Trump wreak havoc on Japan’s exporters? President Trump has threatened to impose a tariff on Mexican and Chinese imports, which wouldn’t create insurmountable challenges for Japanese firms producing cars and other products in these... 27th January 2017 · 1 min read
Japan Economics Weekly Budget improvements set to stall Official data show a sharp decline in the budget deficit but it remains sizeable and we don’t expect the narrowing to continue. In any case, the key determinant of the sustainability of the public... 20th January 2017 · 1 min read
Japan Economics Weekly How much spare capacity is left? Recent revisions to the GDP data suggest that the output gap has all but closed. However, the main factor holding back inflation over the last two decades were entrenched deflation expectations rather... 13th January 2017 · 1 min read
Japan Economics Weekly Who will benefit from rising US interest rates? The recent slump in the yen has lifted the yen-value of foreign assets and associated income streams. We estimate that the government’s net debt has fallen by 11% of GDP since the US election as the... 6th January 2017 · 1 min read
Japan Economics Weekly What to expect in 2017 We expect Japan’s economy to grow by 1% next year. Given how low potential growth is, this should be enough to drive a further decline in spare capacity and to add to price pressures. The Bank of... 23rd December 2016 · 1 min read
Japan Economics Weekly Boost from net trade to fizzle out next year The recent sharp fall in import volumes is largely a legacy of the slump in the exchange rate in the early stages of Abenomics. We expect imports to rebound next year, so the boost from net trade to... 16th December 2016 · 1 min read
Japan Economics Weekly What to expect from the upcoming Shunto? We expect the upcoming spring wage negotiations to result in base pay hikes of only 0.5% or so, which would be broadly in line with the increase agreed upon this year. Even with output per employee... 9th December 2016 · 1 min read
Japan Economics Weekly Yen weakness to feed inflation rebound The recent weakening of the yen will lift headline inflation by around 0.5 percentage points in coming months and further gains are likely if, as we have been forecasting for a while, the yen weakens... 2nd December 2016 · 1 min read
Japan Economics Weekly BoJ set to taper its JGB purchases A further rise in global government bond yields may put the Bank of Japan’s yield target under pressure but we nonetheless believe the Bank will be able to reduce its asset purchases next year while... 25th November 2016 · 1 min read
Japan Economics Weekly Bank of Japan on hold for foreseeable future With the yen weakening dramatically since the US election and incoming data showing GDP growth strong last quarter, there is now little pressure on the Bank of Japan to ease further. Less positively... 18th November 2016 · 1 min read
Japan Economics Weekly Housing rent to remain a drag on inflation Falling rents have been a persistent drag on inflation in Japan. While condominium prices have surged since the launch of QQE, there is virtually no link between house prices and rents. Instead, rents... 11th November 2016 · 1 min read
Japan Economics Weekly Is consumer spending about to take off? Consumer spending has been broadly flat since 2014’s sales tax hike as households have used the windfall from falling energy and import prices to replenish savings. However, we believe that this is... 4th November 2016 · 1 min read
Japan Economics Weekly When will the Bank of Japan start tapering? The Bank of Japan recently abandoned its target for expansion of the monetary base but said that it would continue to buy assets at around the same rate as before. This pace of asset purchases will... 28th October 2016 · 1 min read
Japan Economics Weekly Surge in current account highlights sluggish demand The strong recent increase in the current account surplus is bad news for an economy struggling with persistently weak demand, as it implies that households and firms have saved rather than spent the... 21st October 2016 · 1 min read
