Our Japan Chart Pack has been updated with the latest data and our analysis of recent developments.
We no longer expect the economy to enter a recession. But with real disposable incomes falling, we expect domestic demand to remain sluggish. Meanwhile, falling import prices and extension of energy subsidies should bring inflation down before long. While we expect the labour market to start tightening again, prices and wages should enter a disinflationary spiral. Hence, we do not think the hurdle for policy tightening will be cleared anytime soon.
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