External Trade (Mar.)

Exports fell sharply in March and are set to plummet this quarter as economic activity in most of Japan’s major trading partners has collapsed.
Tom Learmouth Japan Economist
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Japan Economics Weekly

Carmakers will struggle even after shortages abate

The disruptions to supply chains from Delta outbreaks across Southeast Asia that resulted in another big drop in car exports in September will ease soon. However, carmakers are responding with lower capital spending and are lagging their US and European counterparts in electric vehicle sales. The upshot is that the sector won’t return to former glory.

22 October 2021

Japan Data Response

Japan Consumer Prices (Sep. 2021)

Headline inflation in September turned positive for the first time this year due to spikes in fresh food and energy inflation. As the drag from mobile phone tariffs fades in the first half of next year, underlying inflation will turn positive. However, we think it will struggle to break past 1%.

22 October 2021

Bank of Japan Watch

Bank to look through weaker yen and supply shortages

Sitting comfortably with continuity candidate PM Kishida in charge, the Bank of Japan won’t alter its major policy settings at its October meeting. And we doubt the Bank will respond with policy tweaks to the recent weakening in the yen, nor to continued supply chain disruptions.

21 October 2021

More from Tom Learmouth

Japan Economics Weekly

Vaccines for all by November, ¥1000 minimum wage

The revised Q1 GDP figures and April wage data released this week suggest the economy was a little more resilient than first appeared in the early part of this year. And the economy is looking increasingly well set for a strong rebound in the second half of the year. Daily COVID cases and the number of patients in hospital have continued to plunge. With 98% of Japan’s municipalities expecting to be able to meet the government’s target of finishing vaccinations for the over-65s by end-July, the risk of the healthcare system being stretched to breaking point again is diminishing. The only remaining major downside risk now is the prospect of a more infectious variant – such as that first found in India – taking hold rapidly soon.

11 June 2021

Bank of Japan Watch

Asset purchases to remain low but rates on hold

At its June meeting we think the Bank of Japan may extend the deadline on its emergency lending facility from September to December. Beyond that point, it should further taper its purchases of short-dated debt as it digs in for a prolonged hold.

11 June 2021

Japan Data Response

Japan Wages (Apr.) & GDP (Revised Q1 2021)

While the marked acceleration in wage growth in April was largely down to favourable base effects, we think wage growth will remain strong throughout this year as the labour market tightens and overtime hours recover further as vaccines allow the domestic economy to fully reopen. Meanwhile, the upward revision to Q1 GDP and further rise in working hours in April suggests that the economy may have been a little more resilient than many were expecting in the first half of the year.

8 June 2021
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