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Business investment will continue to impress

The early indications point to a fall in capital spending in Q1. However, mounting capacity and staff shortages suggest that spending on machinery and equipment will continue to grow faster than overall output both this year and next. This is good news for domestic machinery makers which provide the bulk of new machinery and equipment.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Economics Weekly

Virus fears waning, Bank of Japan plans could change

We doubt that the spike in mobility during Golden Week is a harbinger of a rapid rebound in consumer spending. Mounting concerns about rising living costs and lingering virus fears among the elderly will keep the savings rate well above pre-virus levels. Meanwhile, the Bank of Japan this week ruled out widening the tolerance band around its 10-year yield target. However, markets remain unconvinced as yields continue to trade close to the ceiling of the band. We still expect the Bank to come under renewed pressure to defend the target, eventually forcing it to widen the tolerance band.  

13 May 2022

Japan Economics Update

Large pot of pandemic savings to collect dust

The hit to household incomes from higher inflation will be much smaller in Japan than elsewhere and consumers have plenty of pandemic forced savings to tap into to sustain spending. But we nonetheless expect the rebound in consumption to disappoint over the coming months as consumers are spooked by rare price hikes to everyday items and some remain wary of catching the virus. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

11 May 2022

Japan Data Response

Japan Labour Cash Earnings (Mar. 22)

Nominal wage growth stayed at 1.2% in March and we think it could touch 2% over the coming months as overtime and bonus payments get back to their pre-virus levels. But with base pay growth still weak, we think overall wage growth will fall back to 1% before long. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

9 May 2022

More from Marcel Thieliant

Australia & New Zealand Economics Update

Hawkish RBA to hike rates in early-2023

The Reserve Bank of Australia delivered a hawkish surprise by not delaying the tapering of its bond purchases. And by predicting that it will hit its full employment mandate and make further progress towards its inflation target, it has opened the door for earlier rate hikes than its current guidance of 2024.    

3 August 2021

Japan Economics Update

What would a hard lockdown mean for Japan?

With the Delta variant lifting new infections to a record-high, calls for a “hard” lockdown are growing. If that happened, services activity would fall further but we doubt that the government would shut down industry. And with households and firms now better prepared to deal with virus restrictions, it seems likely that GDP wouldn’t revisit last year’s lows.  

2 August 2021

Australia & New Zealand Economics Weekly

Activity to rebound in fourth quarter

With the Sydney lockdown set to extend into the fourth quarter, we’ve lowered our Q3 GDP forecast further. However, we still think that the economy will bounce back in Q4 as vaccine hesitancy is collapsing and vaccine supply is set to pick up. As such, we’re sticking to our view that the RBA will hike interest rates in early-2023.

30 July 2021
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