Japan Economic Forecast

Japan Economic Outlook

June 25, 2019

Comprehensive GDP data for the first quarter confirmed that the relatively robust expansion was mostly propelled by a sharp decline in imports of goods and services. Underlying domestic demand, meanwhile, appeared weak as reflected by lackluster private consumption in Q1, raising concerns over Prime Minister Shinzo Abe’s plans for household demand to drive economic growth. Turning to the second quarter, consumer confidence tumbled to an over three-year low in May, which does not bode well for a recovery in consumer spending and leaves Abe at a crossroad whether to move ahead with a controversial sales tax in October. Japan’s economic prospects are quickly worsening as escalating trade tensions, especially between China and the United States, could further erode global demand and, in turn, Japan’s all-important external sector.

Japan Economic Growth

Faltering global demand is expected to weigh on growth this year. Conversely, the economy should benefit from frantic front-loading of consumer purchases ahead of October’s sales tax. The key downside risks are further trade restrictions, which would reduce demand for Japanese goods, as well as weaker global growth, which could strengthen the yen. FocusEconomics panelists see the economy growing 0.8% in 2019, which is unchanged from last month’s forecast, and 0.5% in 2020.

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Japan Facts

Bond Yield-0.14-4.41 %Jul 11
Exchange Rate108.5-0.35 %Jul 11
Stock Market21,6440.40 %Jul 11

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