Struggling to generate inflation even now

While inflation in most advanced economies is now well above central banks’ targets, it is still negative in Japan. This is largely due to idiosyncratic factors that should fade by the middle of next year. Even so, inflation won’t reach the Bank of Japan’s 2% target anytime soon.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Data Response

Labour Market & Industrial Production (Oct. 2021)

Employment fell sharply again in October despite the lifting of states of emergency declarations at the start of the month. However, it should rebound sharply across November and December in line with the revival in face-to-face service sector activity. And while industrial production only edged up in October, we think it too will rebound more strongly this month and next, potentially approaching its recent April peak in December.

30 November 2021

Japan Data Response

Japan Retail Sales (Oct. 2021)

Retail sales kept rising in October despite another drop in motor vehicles sales. With supply disruptions now starting to ease and mobility picking up, they should continue to increase.

29 November 2021

Japan Economics Weekly

Government seeks to revive soggy chip industry

The breakdown of PM Kishida’s new supplementary budget released today showed that ¥600 billion has been allocated to reviving semiconductor manufacturing in Japan. The centrepiece of the plan is a new TSMC factory in Kumamoto Prefecture that will produce the mid-range chips critical for car production. Given recent supply disruptions caused by chip shortages, beefing up local production makes strategic sense. We think the government’s new interventionist approach to stimulating mid-range chip production may succeed, but plans to make inroads into high-range chip production are likely to fall flat.

26 November 2021

More from Marcel Thieliant

Australia & New Zealand Data Response

Australia Labour Market (Aug.)

Employment plunged by 1.1% m/m in August, but we still think that the unemployment rate won’t surpass it pre-Delta level over the coming months even as the participation rate rebounds.

16 September 2021

Japan Data Response

Japan External Trade (Aug. 2021)

Today’s trade figures suggest that export volumes kept rising and we think that Japan’s focus on cars and machinery means that they will hold up better than in other Asian economies.

16 September 2021

Australia & New Zealand Economics Update

Australia- What to expect from a monetary policy review

We doubt that any independent review of Australia’s monetary policy framework would result in a change to the RBA’s 2-3% inflation target. But the Bank could be forced to put more emphasis on house prices, reduce the frequency of Board meetings, and strengthen the role of external Board members.

15 September 2021
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