Japan External Trade (Jun. 2021)

The rebound in exports showed further signs of slowing in June despite another high y/y growth rate caused by base effects. We think external demand will only provide a small tailwind to growth over the coming months as capital goods exports continue to rise but consumer goods exports weaken in the wake of vaccine rollouts.
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

Delta variant taking hold in Tokyo before Olympics

A delta variant-driven fifth wave has begun and cases are beginning to surge in Tokyo ahead of the Olympics opening ceremony next Friday. However, the variant is still overwhelmingly concentrated in Tokyo – where a state of emergency came into force on Monday – and vaccines are already beginning to have a positive impact. Only a small fraction of cases are now amongst the over-65s and nationwide deaths are at their lowest level since November. Indeed, we think the current outbreak should be manageable with the current restrictions in place and still expect PM Suga to be able to remove most domestic restrictions from late-Q3 once vaccine coverage is high.

16 July 2021

Bank of Japan Watch

New climate change facility not a game changer

At its July meeting we expect the Bank of Japan to outline that it will offer interest-free loans to banks under its new fund-provisioning measures aimed at addressing climate change. Beyond that though, the Bank won’t alter its major policy settings.

9 July 2021

Japan Data Response

Japan Wages & Household Spending (May 2021)

While the further acceleration in wage growth in May was again largely down to favourable base effects, we think wage growth will stay elevated as the labour market tightens and vaccines fuel a further recovery in overtime pay. Meanwhile, the only modest drop in household spending in May suggests that consumer spending may have edged up last quarter.

6 July 2021
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