My subscription
...
Filters
My Subscription All Publications

Japan External Trade (Sep. 2021)

    The sharp fall in exports in September suggests that supply shortages are severely hampering manufacturing activity in some sectors. However, we think exports will soon bounce back as supply shortages for car producers gradually ease and machinery exports continue to expand at a fast pace.
Tom Learmouth Japan Economist
Continue reading

More from Japan

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 Chart Book

Domestic headwinds fading

While parts of Japan’s manufacturing sector remain under severe pressure from global supply chain shortages, domestic headwinds to the recovery have dissipated further in recent weeks. That supports our view that a strong rebound is brewing. Breaking 23,000 in late-August, the seven-day average of new infections has fallen to around 500 this week – the lowest in over a year. And with the number of patients in intensive care also at its lowest in a year, hospitals now have clear breathing space. That reduces the chances of fresh states of emergency having to be declared to combat a potential winter wave. In recent days mobility has been stronger than it was at the same stage in October 2020 which ­– by some measures – was the strongest month of the pandemic so far for consumption. And Tokyo announced today that it will on Monday remove its 9pm curfew request for the more than 80% bars & restaurants complying with the latest virus guidelines. Driven by a strong rebound in face-to-face service sector activity, we expect GDP to rise by 1.7% q/q, taking it above the pre-virus level this quarter.

19 October 2021

Japan Economics Weekly

Kishida dissolves parliament, firms look to seniors

The ruling LDP appears to be bracing for a slimming down of its lower house majority in the general election that will take place on 31st October. That would make tangible structural reform progress under PM Kishida even less likely. And while a large fiscal stimulus package will be compiled immediately after the election, it’s likely to sustain the elevated fiscal support of the past year rather than act as a fresh driver of growth. Meanwhile, firms appear to be readying themselves for renewed labour shortages once the economy reopens by drawing up plans to re-employ more seniors. We expect further increases in over-60s employment to drive labour force participation higher over the next few years.

15 October 2021

Japan Data Response

Japan Machinery Orders (Aug. 2021)

The fall in machinery orders in August supports our view that the recovery in business investment stalled a little across Q3. But private investment should rebound more strongly in Q4 and into next year provided vaccines allow economic activity to return to somewhere near normal.

13 October 2021
↑ Back to top