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Capital Economics

The leading macroeconomic research consultancy

Japan Economics Update

Short and timely commentaries on economic or market issues and events.

Sample - Small business survey raises some warning flags

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How disruptive are tensions with China?Bank of Japan likely to keep its inflation targetBank of Japan probably on hold until second half of 2014Monetary Indicators Monitor (Oct.)Which indicators will be most affected by the sales tax hike?Bank of Japan in no hurry to ease furtherMonetary Indicators Monitor (Sep.)What to expect from the autumn Diet sessionNikkei set to outperform againBank of Japan still likely to ease more
Consumption tax hike leaves credibility at riskCross-border lending exposes Japanese banks to new risksMonetary Indicators Monitor (Aug.)Olympics likely to be an economic non-eventBank of Japan reiterates support for consumption tax hikesMore is needed to encourage women to workRaising the official retirement age may have little impactMonetary Indicators Monitor (Jul.)Options for the consumption taxCase for corporate tax cuts appears irresistible
Business investment turning upWhat do the Q2 GDP data mean for the consumption tax?Bank of Japan may still have to ease furtherTrans-Pacific Partnership talks to test PM Abe’s resolveHard work begins after the Upper House electionsNuclear energy restart not a game changerMonetary Indicators Monitor (Jun.)Time to shift the focus to “core-core” inflation?Bank of Japan may still have more work to doConfidence in “Abenomics” still high, but waning
Economy Watchers Survey suggests recovery is slowingRising wages needed to keep up with higher pricesTankan confirms recovery on trackSmall firms shrug off market volatilityMonetary Indicators Monitor (May)Surge in exports not quite as good as it looksWhat's behind the rebound in the yen?What’s holding back investment?Bank of Japan declines to panicSurveys show faith in "Abenomics" remains high
Verdict on Abe speech seems harshConsumption tax hikes essential to maintain credibilityRetail sales yet to take offSmall business survey illustrates risks to recoveryBoost to Nikkei from weaker yen has run its courseBank of Japan sticks to its gunsGDP starts 2013 stronglyMonetary Indicators Monitor (Apr.)Consumer confidence falters on inflation fearsWhat’s behind the surge in JGB yields?
Improving sentiment still not matched in hard dataWhat next for the yen?Monetary Indicators Monitor (Mar.)Slighter better trade data still little to cheerBoost to confidence from “Abenomics” may be waningMore downside for yen than upside for Nikkei?BoJ sets high bar to establish credibilitySmall business survey raises some warning flagsPositive wealth effects from equity gains still limitedTrade data show yen weakness has costs as well as benefits
Monetary Indicators Monitor (Feb.)Business and consumer surveys up but details not so goodImproving sentiment yet to be matched in investmentBank of Japan awaits Kuroda but will surely move in AprilHigher inflation not necessarily good news for workersIndustry recovering but still plenty for Kuroda to doGlobal demand, not yen, behind export recoverySlide back into recession bad news but old newsJapanese consumers confident in “Abenomics”Q4 GDP probably still fell despite recovery in orders
Hopes of smooth handover at the BoJ may be wishful thinkingFiscal credibility starting to unravelRecord trade deficit only partly due to yen strengthMonetary Indicators Monitor (Dec. 12)Should we worry about the Bank of Japan’s independence?Bank of Japan’s policy overhaul fails to impress"Fiscal stimulus" just more of the sameWill there be any real change at the Bank of Japan?Auto sales recovering but cash still tight for consumersFurther easing risks undermining Bank of Japan independence
Monetary Indicators Monitor (Nov.)What the LDP win means for Japan's economyPoor Tankan increases pressure on Japan's policymakersSituation bad, but not getting any worseWeak manufacturing sector dragging on investmentDismal October data will fuel debate ahead of electionHow much difference would a 2% inflation target make?Exports to remain a drag on growthWhat next for the Bank of Japan?Monetary Indicators Monitor (Oct.)
Japanese economy plunging into recessionA sharp contraction expected with further falls to comeHeading back into recessionStill no game changer from Bank of JapanExport slump will drag on Q3 GDPMonetary Indicators Monitor (Sep.)Worse to come as machinery orders slumpTankan consistent with GDP contractionTankan to signal weaker Q3, no recovery in Q4Shrinking exports will act as large drag on Q3 GDP
BoJ easing welcome but will not succeed in capping yenMonetary Indicators Monitor (Aug.)Machinery orders still weak despite pick-up in JulyBusinesses’ hopes of recovery scaled backNo sign yet of slowdown bottoming outDisappointing investment survey suggests weaker growthDisappointing investment survey suggests weaker growthRetail sales fall as support from vehicle subsidy fadesWeak Japanese exports continue regional trendMonetary Indicators Monitor (Jul.)
Fading growth remains reliant on government supportThe economy is not “picking up moderately”Recovery starting to unravelRecovery loses more steamIndustrial sector leading the way downThreat of FX intervention buildingLoan demand rises in response to government policyMonetary Indicators Monitor (Jun.)Bank of Japan saves its ammunitionOrders collapse as global worries mount
Tankan less encouraging than headlines suggestTankan to signal weaker growth in Q2 and Q3Strong retail spending flattered by auto subsidyConsumption tax (finally) set to riseMonetary Indicators Monitor (May)Monetary Indicators Monitor (May)Underlying investment outlook remains weakCan Japan’s stimulus offset weak demand elsewhere?Business conditions tougher than expected but optimism remainsRecovery already losing momentum
Bank of Japan still biased towards further easingRecovery in Japan too dependent on government supportEconomic outlook improving but challenges remainRising wages could be a small bright spot for the economyRecovery appears to be falteringBank of Japan plays a poor hand badlyPick-up in loan demand suggests policy already loose enoughNet trade supports return to GDP growth in Q1More easing coming, but will it work?Stagnant Tankan highlights risk of relapse in Japan
Retail sales jump flattered by temporary factorsTankan to signal return to anaemic growthNet exports on course to boost Q1 GDPReconstruction to drive improvement in Business conditionsFurther monetary easing in the pipelineFragile recovery still needs more policy supportCurrent account deficit a one-offIndustrial production points to a return to growthJump in retail sales due to temporary factorsA stronger yen likely to undermine Japan’s stock market