Regional banking shake-up gathering momentum

Japan’s banking regulator announced this week several measures to accelerate consolidation in the ailing regional banking sector. The changes should discourage banks from taking on too much risk, improve their profitability via less competition, and strengthen their resilience in case the Bank of Japan decides to ease policy further.
Tom Learmouth Japan Economist
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Japan Economics Weekly

Restrictions may not last long, key Shunto approaching

With restrictions this week expanded to cover most of Japan’s economy, and surging infections already starting to cause staff shortages in some industries, GDP is only likely to tread water this quarter. But based on experience elsewhere, the Omicron surge may only last another couple of weeks before staff shortages ease and countermeasures start to be lifted again. Meanwhile, reports suggesting that Toyota’s labour union – sometimes seen as a bellwether in wage talks – will seek a sharp rise in bonus payments at this year’s Shunto could be an early sign that wage growth will pick up this year in line with PM Kishida’s wishes.

21 January 2022

Japan Data Response

Japan Consumer Prices (Dec. 2021)

Consumer price inflation reached a two-year high of 0.8% in December, but with energy prices set to fall back, we think that it will peak around 1% by mid-year.

21 January 2022

Japan Data Response

Japan External Trade (Dec. 2021)

Exports were broadly stable in December after a sharp rebound in November. We think they’ll continue to recover at a decent pace this year as external demand for capital goods continues to rise and motor vehicle exports resume their recovery once Omicron waves subside.

20 January 2022

More from Tom Learmouth

Japan Economics Weekly

Vaccines for all by November, ¥1000 minimum wage

The revised Q1 GDP figures and April wage data released this week suggest the economy was a little more resilient than first appeared in the early part of this year. And the economy is looking increasingly well set for a strong rebound in the second half of the year. Daily COVID cases and the number of patients in hospital have continued to plunge. With 98% of Japan’s municipalities expecting to be able to meet the government’s target of finishing vaccinations for the over-65s by end-July, the risk of the healthcare system being stretched to breaking point again is diminishing. The only remaining major downside risk now is the prospect of a more infectious variant – such as that first found in India – taking hold rapidly soon.

11 June 2021

Bank of Japan Watch

Asset purchases to remain low but rates on hold

At its June meeting we think the Bank of Japan may extend the deadline on its emergency lending facility from September to December. Beyond that point, it should further taper its purchases of short-dated debt as it digs in for a prolonged hold.

11 June 2021

Japan Data Response

Japan Wages (Apr.) & GDP (Revised Q1 2021)

While the marked acceleration in wage growth in April was largely down to favourable base effects, we think wage growth will remain strong throughout this year as the labour market tightens and overtime hours recover further as vaccines allow the domestic economy to fully reopen. Meanwhile, the upward revision to Q1 GDP and further rise in working hours in April suggests that the economy may have been a little more resilient than many were expecting in the first half of the year.

8 June 2021
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