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Outlook for consumer spending remains good

A slowdown in labour income forced households to reduce their savings in recent months. However, households have also become more upbeat about their personal finances. And with income growth likely to rebound in coming months, the outlook for consumer spending remains positive even when the recent plunge in the saving rate eventually comes to an end.
Shilan Shah Senior India Economist
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More from Japan

Japan Economics Weekly

Recovery will continue to disappoint

The slump in industrial output and the stagnation in real retail sales in May has prompted us to lower our estimate of Q2 GDP growth. While the easing of the lockdown in Shanghai will contribute to a rebound in motor vehicle output over coming months, the bigger picture is that supply shortages remain intense. And with external demand softening, Japan’s economy won’t recover as rapidly this year as most anticipate.

1 July 2022

Japan Data Response

Tankan (Q2), Labour Market (May) & Tokyo CPI (Jun.)

Today’s Tankan survey suggests that while the services sector is benefitting from the easing of virus restrictions, the outlook for the manufacturing sector is worsening. Meanwhile, the labour market didn’t tighten any further in May and inflation edged down in Tokyo in June, but we still expect the unemployment rate to fall further and underlying inflation to creep higher over coming months.

1 July 2022

Japan Data Response

Japan Industrial Production (May 2022)

The plunge in industrial output in May suggests that Japan’s recovery is disappointing yet again. The upshot is that it will take until the second half of the year for GDP to surpass its pre-virus level. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

30 June 2022

More from Shilan Shah

Emerging Markets Economics Update

SDR allocation a positive but won’t solve debt woes

The $650bn allocation of IMF Special Drawing Rights (SDRs) that was finally signed off by the IMF yesterday should provide welcome relief to some frontier markets such as Ghana and Kenya that still face very high foreign borrowing costs. But it won’t solve the underlying problems in EMs where debt dynamics look unsustainable, such as Tunisia and Argentina.

3 August 2021

India Economics Update

Asset sales delay will create a fiscal hole

The postponement of the planned privatisation of two state-owned banks to next year has dealt an all-too-familiar blow to the Finance Ministry’s hopes of raising significant revenues from asset sales in FY21/22. Rather than relaxing the overall fiscal deficit target, we expect the Finance Ministry to opt to make up for the revenue shortfall by reducing spending, which would weigh on the economic recovery.

3 August 2021

India Economics Weekly

Bankruptcy code upgrade, RBI meeting

The amendments to the Insolvency and Bankruptcy Code (IBC) that were approved in the Lok Sabha (lower house of parliament) this week could provide much-needed support to India’s banking sector. But there's no guarantee that they will pass through the Rajya Sabha. Next week, we think interest rates will be left unchanged at the conclusion of the RBI's policy meeting on Friday as it remains focused on supporting the economic recovery.
 

30 July 2021
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