Japan Economic Outlook
December 20, 2019The economy grew faster than initially estimated in the third quarter, according to a second GDP release. The improvement was due to upgraded estimates for the domestic economy, notably fixed investment. The external sector, however, continued to flag, likely weighed on by trade tensions with Korea and between the U.S. and China. Turning to the fourth quarter, economic activity appears to be waning given the PMI measuring private sector activity fell into contractionary territory in October and remained stuck there through December. Activity is likely being subdued by the sales tax increase from 8% to 10% that took effect in October; Typhoon Hagibis, which hit Japan in October; and continued trade tensions. To boost the economy, the government recently announced a USD 120 billion spending package, around 20% of which will be spent from December to March, and the rest from April 2020 to March 2021.
Japan Economic GrowthIn 2020, economic growth is likely to slow notably, largely as the sales tax hike will constrain private consumption. Moreover, continuing trade tensions will weigh on the external sector. That said, the economy should benefit from ultra-low interest rates, spillovers from the 2020 Olympics and low unemployment. FocusEconomics panelists see the economy growing 0.4% in 2020, which is unchanged from last month’s forecast, and 0.8% in 2021.
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|Bond Yield||-0.02||-4.41 %||Dec 30|
|Exchange Rate||108.7||-0.35 %||Jan 01|
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Japan Economic News
January 24, 2020
A flash reading of the Jibun Bank composite Purchasing Managers’ Index (PMI) showed an increase to 51.1 in January from a revised 48.6 in December (previously reported: 49.8).
January 24, 2020
The core consumer price index increased 0.1% in month-on-month seasonally-adjusted terms in December, following November’s 0.2% rise.
January 23, 2020
Yen-denominated merchandise exports fell 6.3% in December in year-on-year terms, after decreasing 7.9% in November and marking the 13th consecutive decline.
January 21, 2020
At its monetary policy meeting ending on 21 January, the Bank of Japan (BoJ) decided in a seven-to-two vote to keep its accommodative monetary policy scheme unchanged, as had been expected by market analysts, remaining cautious despite raising its economic growth forecasts.
January 16, 2020
Core machinery orders (private sector, excluding volatile orders), a leading indicator for capital spending over the coming three- to six-month period, increased in November for the first time in five months. Specifically, core machinery orders rose 18.0% in November compared to the previous month in seasonally-adjusted terms, contrasting the 6.0% decrease in October and easily surpassing market analyst expectations of a 3.2% gain. In year-on-year terms, core machinery orders increased 5.3% in November, contrasting the 6.1% decrease in October.