Japan Economic Outlook
September 1, 2020The economy was hit hard in Q2, according to preliminary GDP estimates, as the pandemic wreaked havoc on both the domestic and external sectors. Private consumption plunged on the back of restrictions enacted in April–May, with retail sales falling nearly 10% during the period, and softening foreign demand saw exports tumble across the quarter. While the lifting of the state of emergency in late May bodes well for a recovery in Q3, recent data suggests a fairly mild rebound: PMIs for both manufacturing and services were still subdued through August. Meanwhile, in the political sphere, Prime Minister Shinzo Abe is set to resign due to ongoing health problems once the ruling Liberal Democratic party selects a new leader. No significant changes in economic policy are expected in the short term, however.
Japan Economic GrowthThis year, GDP is projected to contract sharply as domestic demand tumbles amid diminished consumption and investment. Moreover, the delaying of the Tokyo Olympic games will hit tourism. Substantial fiscal and monetary stimulus should soften the downturn, although stubbornly high Covid-19 case rates throughout August cloud the outlook. FocusEconomics panelists see the economy contracting 5.1% in 2020, which is down 0.3 percentage points from last month’s forecast, before growing 2.7% in 2021.
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Japan Economic News
September 16, 2020
Yen-denominated merchandise exports sank 14.8% year-on-year in August, moderating from July’s 19.2% drop.
September 10, 2020
Core machinery orders—which cover the private sector, exclude volatile orders and are a leading indicator for capital spending over the coming three-to-six-month period—expanded 6.3% month-on-month in seasonally-adjusted terms in July, bouncing back strongly from June’s 7.6% decline.
September 8, 2020
According to comprehensive estimates, GDP contracted 28.1% in seasonally-adjusted annualized terms (SAAR) in the second quarter, below the 27.8% from the preliminary estimate and far exceeding the 2.3% contraction seen in the first quarter.
August 31, 2020
Industrial production expanded 8.0% month-on-month in seasonally-adjusted terms in July (June: +1.9% mom).
August 31, 2020
The consumer confidence index came in at 29.3 in August, marginally down from July’s 29.5.