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Bank of Japan Tankan (Q1 2022)

The fall in the Q1 Tankan suggests that GDP almost certainly contracted last quarter. However, non-manufacturing sentiment held up better-than-expected during the Omicron wave and the labour market continued to tighten. Indeed, we think output will rebound strongly in Q2.
Tom Learmouth Japan Economist
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Japan Economics Update

The implications of an escalating Taiwan crisis

The extent to which neighbouring countries would be affected by an escalation of tensions between China and Taiwan would depend both on which sides they take and on the nature of restrictions imposed by the West and China. ASEAN countries are most reliant on China both as a source of imported inputs as well as a destination for exports, while major disruptions to semiconductor production in Taiwan would severely restrain Japan’s manufacturing industry despite its smaller trade links with China.

10 August 2022

Japan Chart Book

Output will return to pre-virus trend eventually

With a record virus wave sweeping across the country and consumer confidence slumping, we’re slashing our forecast for Q3 consumption growth from 0.8% to 0.2%. While the government has refrained from declaring another state of emergency, spending was weakening even before virus cases started to surge. That means that GDP will remain much weaker in the near term than the pre-pandemic trend, forcing the Bank of Japan to keep policy loose even as central banks elsewhere are tightening the screws. However, we still expect that gap to close eventually, for two reasons. First, while the long-running rise in the labour force participation rate stalled over the last couple of years, the share of the population available for paid employment is now on the rise again. What’s more, mobility has recently reached pre-virus levels for the first time since the start of the pandemic, which suggests that households are learning to live with the virus even if currently they are not spending as before. The still very high household savings rate should fall in earnest before long.

8 August 2022

Japan Economics Weekly

The rise and fall of Japan's energy imports

Japan is still struggling to wean itself off fossil fuels despite a new government push to boost solar power. However, the country has become more energy efficient over the past decade, which has helped the economy weather the impact of rising global energy prices. Meanwhile, the government has recommended a 3.3% rise in the minimum wage, the largest move on record. While overall wage growth would get a boost over the next year, we think it would still remain well below the 3.0% level the BoJ maintains is needed to sustain inflation above its 2.0% target  

5 August 2022

More from Tom Learmouth

Japan Data Response

Japan Industrial Production (Feb 2022)

Industrial production was broadly unchanged in February after two monthly falls that still left output well below its pre-supply shortages peak.  

31 March 2022

Japan Data Response

Japan Retail Sales (Feb. 2022)

Retail sales dropped again in February, making it almost certain that consumer spending fell across Q1. Looking into Q2 though, private consumption is well set for a strong, booster-boosted rebound.

30 March 2022

Japan Data Response

Japan Labour Market (Feb. 2022)

Employment was unchanged in February after January’s sizeable fall. But with all domestic restrictions since lifted and activity resuming its recovery, employment is set for a strong rebound over the coming months which should push the unemployment rate back down to 2.5% by the end of the year.

29 March 2022
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