Japan Economic Forecast

Japan Economic Outlook

November 21, 2017

Strong global growth continued to propel economic activity in Q3, leading the economy to expand for the seventh consecutive quarter and marking the longest stretch of growth in more than 15 years. Japan’s export-driven economy expanded 1.4% in seasonally-adjusted annualized terms in Q3, which was down from Q2’s stellar 2.6% expansion. Although the deceleration was a result of weaker dynamics at home, the domestic economy should pick up steam in Q4, as the slowdown mostly reflected temporary factors such as bad weather. Recent data confirms that private consumption strengthened so far in Q4, with consumer confidence hitting a four-year high in October. Prime Minister Shinzo Abe accelerated talks to revise Japan’s pacifist constitution following his landslide victory in the 22 October general election, and his party is expected to send its proposals to the national assembly ahead of January’s session.

Japan Economic Growth

Economic growth should lose some steam in 2018 as the tailwinds that propelled growth this year start to wane. Moreover, structural factors will continue to weigh on growth. On the upside, global growth should remain robust next year, while the Central Bank will likely keep its ultra-loose monetary policy. FocusEconomics panelists see the economy growing 1.2% in 2018, which is unchanged from last month’s forecast. For 2019, they see growth at 1.0%.

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Japan Facts

Bond Yield0.06-4.41 %Dec 06
Exchange Rate112.3-0.35 %Dec 06
Stock Market22,1770.40 %Dec 06

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