My subscription
...
Filters
My Subscription All Publications

Weak wage growth to preclude tighter policy

While Japanese inflation will stay just above the Bank of Japan’s 2% target over the coming months, the Bank will not tighten policy at either the short or long end of the yield curve while wage growth and domestic demand remain weak.
Tom Learmouth Japan Economist
Continue reading

More from Japan

Japan Data Response

Japan External Trade (Jul. 2022)

Japan’s trade deficit widened to a record high in July but it should start to shrink over the coming months as supply shortages and commodity prices continue to ease. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

17 August 2022

Japan Data Response

Japan GDP (Q2 2022 Preliminary)

Japan’s economy grew in Q2 driven mainly by private consumption, though the overall figure disappointed mainly due to fluctuations in stockbuilding that won’t last. The recovery should persist through Q3 and Q4, though the pace will slacken a bit, as strong investment momentum is offset by a more subdued consumption outlook. We expect GDP to return to its pre-virus trend before long.

15 August 2022

Japan Economics Weekly

Demographic woes persist, tourists waiting at the gate

An exodus of long-term migrants contributed to the 0.6% fall in Japan’s population last year but with border controls loosened since March net migration is bouncing back strongly. Even so, we still see GDP growth settling around 0.5% over the longer-term as a shrinking workforce offsets productivity gains. Meanwhile, Japan remains a highly popular tourist destination and once the onerous procedural requirements for entry are lifted, probably sometime in Q4, tourist arrivals and spending should rebound strongly.

12 August 2022

More from Tom Learmouth

Japan Economics Weekly

Rising prices won’t prevent solid rebound in Q2

The renewed drop in industrial production and the weakness in retail sales volumes in April has raised concerns that Japan’s recovery will continue to disappoint. However, with consumer prices rising far less than elsewhere, Japan isn’t facing a cost-of-living crisis. Indeed, high frequency data suggest that consumption picked up pace in May as the Omicron wave subsided. The upshot is that we’re sticking to our upbeat forecasts for GDP growth for this quarter and next.  

3 June 2022

Japan Data Response

Labour Market, Industrial Prod. & Retail Sales (Apr. 22)

While employment recovered sharply in April and should soon reclaim its pre-pandemic level, the weakness in both goods production and goods consumption last month suggests that the economy’s Q2 rebound could be more muted than expected.

31 May 2022

Japan Economics Weekly

Corporate tax shakeup, Shanghai parts shortages

The government aims to lift the standard corporate tax rate while providing more generous tax breaks for capital spending. We doubt this will have a noticeable impact on business investment, not least because firms have found ways to circumvent corporate taxes in recent years. Meanwhile, Japan’s car sector continues to be afflicted by supply shortages, this time as a result of the lockdowns in China. We suspect that shortages won’t fully disappear until the end of the year.

27 May 2022
↑ Back to top