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The government’s Business Outlook Survey indicates conditions deteriorated slightly in Q2, confounding Q1’s forecasts of a strong recovery. Despite the tougher-than-expected environment, firms remain optimistic that the recovery has been delayed rather …
11th June 2012
The strong rebound in Japanese GDP in Q1 is likely to mark the high point for growth this year. The recovery is heavily reliant on government support and it looks increasingly unlikely that the private sector can fill the gap as the boost from spending …
With the crisis in the euro-zone escalating further, in this Weekly we use Bank for International Settlement figures to assess how exposed Japanese banks are to the euro-zone periphery economies. … How exposed are Japanese banks to the …
4th June 2012
Japan’s rapid recovery in Q1 already appears to be losing momentum. The unemployment rate has risen again and retail spending fell for a second consecutive month in April. However, government reconstruction spending is likely to continue to support the …
29th May 2012
Japan’s policymakers have said that the euro-zone crisis is not a fire on the other side of the river – the implication being that Japan will not be able to escape indefinitely the debt problems that have engulfed the euro-zone. However, for now at least …
28th May 2012
There is no real substance to suggestions that the lack of any explicit reference to “powerful” easing in the Bank of Japan’s policy statement today signals a shift towards a more neutral stance. However, the Bank is unlikely to be able to prevent a …
23rd May 2012
The Japanese economy managed to rebound in the first quarter, as governmentsupported spending ensured a return to GDP growth. The eco-car subsidy helped drive consumer spending, and public investment increased as earthquake-related reconstruction works …
22nd May 2012
The government’s power saving plan for the summer confirms Japan will face acute power shortages. The hardest hit regions will experience shortages in excess of 15% compared to 2010 levels, and several have been warned to prepare for rolling blackouts. In …
21st May 2012
The Bank of Japan’s Policy Board meeting next week is likely to be uneventful in so far as we are don’t expect to see any change in the asset purchase program. Nonetheless, it may still be important as the Bank needs to reassess its policy options …
17th May 2012
The rebound in Japan’s Q1 GDP was a welcome bolt of good news. Unfortunately it is also likely to mark the high point of the year as we expect growth will slow in the coming quarters. The recovery is heavily reliant on government support, and it is …
April’s consumer confidence survey, released today, shows that sentiment edged lower last month suggesting the recovery in sentiment may have now stalled. With signs of the recovery slowing in Q2 and the Nikkei dropping back below 9,000 in May, sentiment …
15th May 2012
In the last week, the yen has again broken through 80 against the dollar, taking the currency to its strongest level since February. The yen has strengthened despite the recent increase in the ceiling for the Bank of Japan’s JGB purchases under the Asset …
14th May 2012
On the basis of figures released today, Japan’s recovery appears to be on track. But recent data have not been uniformly positive and the next few months are likely to be bumpy. … Economic outlook improving but challenges …
10th May 2012
We have little doubt that the Japanese economy returned to growth in Q1 but it is looking increasingly likely that growth will slow sharply again in Q2 and we wouldn’t completely rule out a renewed contraction. Although the economy will grow over the year …
7th May 2012
The increase in labour cash earnings in March could be an early sign of improvement in the Japanese economy. Although base effects played an important part, other labour market indicators suggest conditions are improving, and this could eventually show …
2nd May 2012
Aggressive monetary easing alone will not be enough to boost prices and activity in the real economy: structural changes to the supply side of the economy are also necessary. Reducing regulation, increasing participation in the labour force and easing the …
30th April 2012
Today’s data releases were inevitably overshadowed by the outcome of the Bank of Japan’s Policy Board meeting, but they were disappointing too. Indeed, they suggest that Japan’s economic recovery may already be stalling again after the likely return to …
27th April 2012
The Bank of Japan’s Policy Board failed to impress with the additional monetary “stimulus” announced today. Any market impact from the ¥10 trillion increase in outright purchases of JGBs was offset by an extension of the period over which the buying will …
Expectations that the Bank of Japan will announce a further increase in asset purchases alongside the publication of updated economic forecasts on Friday are now so high that the Policy Board will have to loosen policy again or risk reversing the …
24th April 2012
Many commentators appear to believe that Japan’s economy could recover from deflation and grow more strongly if only the Bank of Japan were willing to step up its asset purchases. Some also argue that the additional policy measures announced in February …
23rd April 2012
In this Weekly we present our updated GDP forecasts. The Japanese economy looks set to return to growth in Q1 after contracting in four of the last five quarters. We expect the economy will continue to expand over the rest of the year as …
According to the Bank of Japan’s latest Senior Loan Officer Survey (SLOS), loan demand from firms and households jumped in Q1. The pick-up in household demand is particularly encouraging. The survey therefore adds to the evidence that the economic …
20th April 2012
Strong annual export growth in March was flattered by the disruption caused by the Great East Japan Earthquake last year and is still heavily dependent on the recovery in the US. Nonetheless, net trade will have provided a positive contribution to GDP …
19th April 2012
Signs of a recovery in the Japanese economy are becoming more evident as early indicators for March show activity has picked up after a slow start to the year. Confidence is increasing and the eco-car subsidy is providing a strong prop to retail spending. …
18th April 2012
March’s consumer confidence survey, released today, shows sentiment continuing to recover, although it remains below last year’s pre-disaster level. Consumer inflation expectations are also rising again. … Consumer Confidence …
17th April 2012
As if the Bank of Japan were not facing enough political pressure to ease policy further, some commentators have cited the recent contraction in the monetary base as additional evidence that a lot more needs to be done. Our sympathies lie with the central …
16th April 2012
The unexpected jump in core machinery orders in February is clearly welcome but, contrary to many of the headlines this morning, it does not signal a strong recovery in Japan’s capital spending. … Machinery Orders …
11th April 2012
The focus has quickly shifted to the second April meeting of the Bank of Japan’s Policy Board after the widely anticipated decision not to announce any further easing measures today. The publication of updated economic forecasts on the 27th might provide …
10th April 2012
The employment component of the Tankan provided some welcome good news in an otherwise lacklustre survey. The employment index fell to its lowest level in four years, indicating that Japanese firms have now eliminated much of the over-employment that has …
9th April 2012
The Bank of Japan’s Policy Board two-day meeting, which concludes on Tuesday (10th), has been made more interesting by two recent developments: the disappointingly weak Tankan survey and another spike in political pressure for further easing. But while we …
4th April 2012
The Bank of Japan’s quarterly Tankan survey showed business conditions in Japan remained lacklustre in Q1 despite some recent improvements in the monthly data. Respondents forecast only a marginal further improvement in Q2, suggesting the chances of a …
2nd April 2012
The government has finally succeeded in submitting a bill to parliament to increase the consumption tax. This is has been a long time coming and is an important step forward in putting the public finances on a sustainable path. However, the passage of the …
The surprisingly strong rise in Japanese retail sales in February largely reflects a number of temporary factors, including an extra shopping day due to the leap year and earthquake-related insurance payouts. As these props fade, sales could fall sharply. …
29th March 2012
The Bank of Japan’s Tankan survey for March (to be released on Monday) will probably show a small improvement in business conditions in the first quarter, consistent with a return to growth in GDP, as well as a slightly brighter outlook. However, the …
27th March 2012
Confidence among Japan’s small and medium-sized enterprises (SMEs) jumped sharply in March after several months of small declines. However, sentiment is clearly fragile as firms expect conditions to deteriorate again in April. … SME Confidence …
Analysis of conditions for small and medium sized enterprises tends to be overlooked in favour of conditions for large manufacturers despite the importance of the sector to the economy. In this Weekly we take a brief look at Japan’s SMEs and the business …
26th March 2012
Japan’s export figures saw a marked improvement in February amid signs of recovery in the global economy. As things stand, net exports could boost Q1 GDP by up to 0.4%, helping the economy return to growth. … Net exports on course to boost Q1 …
22nd March 2012
The Japanese economy appears to have paused in January after the contraction in activity in the fourth quarter. The only support came from the government subsidy on fuel efficient cars which provided a big boost to retail sales and auto production. …
21st March 2012
The Bank of Japan’s extension last week of its program to support growth sectors is unlikely to make a major contribution to lifting Japan’s relatively low potential growth rate of just 0.5%. Although increasing access to capital would in theory support …
19th March 2012
The government’s Business Outlook Survey indicates conditions deteriorated slightly Q1, consistent with a further contraction in both the Q1 Tankan and GDP. However, the survey also suggests a rapid rebound later in the year as reconstruction-related …
14th March 2012
In 2011, Japan recorded its first full-year trade deficit since 1980. The three main factors responsible were the Great East Japan Earthquake, the slowdown in global demand and the increase in commodity prices. However, the appreciation of the yen during …
13th March 2012
The Bank of Japan’s decision to extend its support for lending to “growth sectors” rather than add to its Asset Purchase Program (APP) today appears to have disappointed some but was the outcome that had looked most likely. Additional asset purchases will …
February’s household survey, released today, suggests that Japan’s consumers still lack confidence in the recovery, while the January data on core machinery orders do not yet justify hopes of a strong rebound in business investment. We continue to expect …
12th March 2012
In this Weekly we look at how last year’s disaster has changed Japan’s economy in the long-term. In our view, the legacy stems mainly from the nuclear catastrophe which will have lasting effects on the energy sector, industry, trade and public finances. …
The Bank of Japan is likely to have been pleased with the market response to the policy measures it announced in February, especially as neither the additional asset purchases nor the tweaks to the language on the price stability target were quite as big …
8th March 2012
Japan’s current account swung into deficit in January, but this was mainly the result of seasonal factors and the deficit is likely to be reversed in February. Nonetheless this acts as a reminder of the growing structural pressures on the current account …
The reintroduction of a government subsidy on fuel-efficient vehicles propelled a big increase in retail spending and industrial production in January. The subsidy should provide some support to auto production and sales this year, but we expect the …
5th March 2012
January’s increase in industrial production and forecasts for further rises in February and March point to a return to GDP growth in Q1. However, further increases in output beyond Q1 are far from assured as firms will soon be dealing with tight …
29th February 2012
The sharp rise in retail spending in January does not herald a resurgence in consumer spending. Sales are likely to drop back when one-off supports, such as the temporary reintroduction of the eco-car subsidy, run their course in the coming months. That …
28th February 2012
Japan’s stock market has been on a roll. We do not expect the good times to last. Although we are revising up our end-2012 and end-2013 forecasts for the Nikkei 225 slightly, to 7,750 (versus 7,500 previously) and to 8,100 (versus 7,600), respectively, …
27th February 2012
