Japan Economics Update Fiscal support not quite as large as most think The fiscal support that Japan’s government provided during the pandemic wasn’t as large as headline figures suggest. Accordingly, the withdrawal of stimulus will be a smaller headwind to the economy... 2nd March 2021 · 3 mins read
Japan Economics Update Wider tolerance band wouldn’t signal tighter policy The Bank of Japan is likely to widen the tolerance band around its 10-year yield target next month. The last time this happened, many saw it – wrongly in our view – as a form of policy tightening. It... 23rd February 2021 · 3 mins read
Japan Economics Update The risks to our upbeat vaccine assumptions While Japan’s vaccine rollout won’t begin until late February, we are assuming that inoculations proceed rapidly enough for most of the vulnerable to be protected by the middle of the year with the... 2nd February 2021 · 6 mins read
Japan Economics Update Review unlikely to herald major policy changes Despite the headwind from the third virus wave, the Bank of Japan revised up its growth forecasts for the next couple of fiscal years. And while Governor Kuroda didn’t provide much insight into what... 21st January 2021 · 4 mins read
Japan Economics Update Output may keep rising despite state of emergency It looks likely that a state of emergency will be declared in the Greater Tokyo Area over the coming weeks which could involve the closure of shops, schools and restaurants. While that will result in... 4th January 2021 · 3 mins read
Japan Economics Update Withdrawal of fiscal support won’t derail recovery On its own, the draft budget for the fiscal year that starts in April points to a sharp tightening in fiscal policy. However, there are several reasons why the headline budget figures are overstating... 21st December 2020 · 3 mins read
Japan Economics Update Review probably won’t result in major policy changes The Bank of Japan’s decision today to extend its emergency loan facility by six months didn’t come as a surprise. The announcement that the Bank would soon conduct an assessment of its easing strategy... 18th December 2020 · 3 mins read
Japan Economics Update Third round of stimulus sets stage for strong rebound The third supplementary budget announced by PM Suga today raises fresh government spending in response to the pandemic to around 12% of GDP. That lifts Japan back up the global fiscal support rankings... 8th December 2020 · 3 mins read
Japan Economics Update Business investment already turning a corner The surge in capital goods shipments in October and solid profit data for Q3 suggest that capital spending is ending the year on a strong note. We’re revising up our forecast for business investment... 7th December 2020 · 3 mins read
Japan Economics Update Bank of Japan acknowledges costs of negative rates The Bank of Japan’s new special deposit facility won’t lift the profitability of struggling banks meaningfully, nor should it result in a rise in money market rates. However, it is another sign that... 30th November 2020 · 3 mins read
Japan Economics Update Vaccines will hasten return to pre-virus economic path We now assume that one or more COVID-19 vaccines will be widely available in Japan next year, which suggests that the drag on activity from voluntary social distancing will come to an end. That should... 26th November 2020 · 3 mins read
Japan Economics Update Benefits from RCEP set to be modest Given that Japan doesn’t have existing free trade agreements with either China or Korea, it is set to benefit more than other participants from the recently signed RCEP deal. However, tariffs will... 18th November 2020 · 3 mins read
Japan Economics Update Fiscal response looks more muscular with tax deferrals We estimate that firms deferred around ¥17tn in tax and social security contributions during the state of emergency. Most of those deferrals will have to be paid back by mid-2021 but we suspect that... 29th October 2020 · 3 mins read
Japan Economics Update BoJ to stay the course The Bank of Japan today revised up its outlook for GDP growth for the next couple of years, reducing the already scant chances of additional easing even further. 29th October 2020 · 3 mins read
Japan Economics Update Will equal pay for equal work raise labour costs? Recent court rulings clarifying the application of the government’s new “equal pay for equal work” law are unlikely to lead to higher labour costs for firms. Most firms already pay their irregular... 22nd October 2020 · 3 mins read
Japan Economics Update BoJ will keep policy unchanged The Bank of Japan’s decision to keep policy settings unchanged today didn’t come as a surprise and we don’t expect incoming PM Suga to push the Bank into policy rate cuts. 17th September 2020 · 3 mins read
