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The decision at the Bank of Japan’s Policy Board meeting next week is likely to be finely balanced. There are several goods reasons to believe the Board will further extend monetary easing, and several strong reasons to think it won’t. On balance, we …
11th December 2012
The latest figures on Japan’s economy suggest that it has already fallen into recession and is unlikely to emerge before next year. However, whilst the economic backdrop is bad, it is at least not getting any worse. Firms expect a recovery in the first …
10th December 2012
The fatal accident in the Sasago Tunnel on Sunday 2nd December has turned the spotlight on to Japan’s ageing infrastructure ahead of the Lower House elections at the end of this week. In this Weekly , we take a closer look at infrastructure spending in …
The Ministry of Finance’s quarterly investment survey was weaker than most had expected, but shouldnonetheless mean a slightly upward revision to Q3 GDP. Unlike the forthcoming Tankan and BusinessOutlook surveys, the investment survey is only backward …
3rd December 2012
On Friday, Japan’s government announced another stimulus package, the second in just over a month. For Japan’s economy the package is more a prick of the finger than a shot in the arm and appears to be a poor last ditch attempt for votes by the ruling DPJ …
The publication of the main economic figures for October is likely to heavily influence the debate ahead of December’s elections. Dismal figures are expected, and will probably leave the main parties clamouring for additional fiscal stimulus to reignite …
29th November 2012
We think that the markets would be wrong to expect major changes in the Bank of Japan’s monetary stance after the Lower House elections in December. For a start, it is not certain that the LDP will win. Even if opposition leader Shinzo Abe does become …
26th November 2012
The LDP’s manifesto for the elections in December, published today, includes a commitment to persuade the Bank of Japan to raise its inflation target from 1% to 2%. This has added to the downward pressure on the yen in anticipation of more aggressive …
21st November 2012
A quick look at what’s behind the recent slide in Japan’s exports confirms that the main drag is the renewed downturn in the global economy. Exports to China have not deteriorated more than those to other countries while the yen has actually weakened …
The election of an LDP-led government would be unlikely to result in the dramatic shift in policy at the Bank of Japan than many now seem to expect. Proposals that threaten the independence of the central bank will probably be dropped. And for all the …
20th November 2012
The Bank of Japan’s asset purchase program continues to drive growth in the monetary base. There are few signs of this feeding through to stronger credit demand. … Monetary Indicators Monitor …
Japan’s economy saw a large contraction in the third quarter and looks set for a second contraction in Q4. Output indicators have fallen and improvements in the labour market earlier in the year are likely to begin to unwind, further undermining private …
19th November 2012
Prime Minister Yoshihiko Noda dissolved parliament on Friday, paving the way for a general election on 16th December. The decision is likely to mean the fall of the ruling DPJ party from office and the return of the Liberal Democratic Party (LDP) to power …
The Bank of Japan’s Policy Board meeting next week is likely to be uneventful. The Board has eased monetary policy twice in three meetings over the last two months, and we see little justification for further easing next Tuesday. Most of the additional …
13th November 2012
Japan’s economy may already be in recession. The sharp fall in Q3 GDP was the first contraction this year but increasingly looks like it will not be the last. We are now expecting a contraction in Q4 GDP. … Japanese economy plunging into …
12th November 2012
Improvements in labour market conditions earlier this year came to a halt in Q3 as the economy experienced a sharp decline. With most indicators pointing to a further contraction in Q4, we think labour market conditions will soon begin to deteriorate. …
Consensus expectations for Japan’s Q3 growth have been slashed over the last month. However, based on today’s dire numbers the contraction in Q3 could be even worse. What’s more, a further fall in output appears to be on the cards in Q4. … A sharp …
8th November 2012
The proposed increase in the consumption tax in April 2014 and again in October 2015 can be expected to affect the economy through two routes. First, it will generate a front-loaded increase in demand followed by a decline after the tax rises. Second, …
5th November 2012
The latest figures on Japan’s economy paint an even worse picture than we had anticipated. That the economy contracted in Q3 is now taken as a given. However, chances of a recovery in Q4 are diminishing and Japan looks like it may face two consecutive …
31st October 2012
The Bank of Japan’s further loosening of monetary policy today left markets underwhelmed. There is still no real sense that the Bank is getting ahead of the curve rather than playing catch up to economic events. Even on the Bank’s new forecasts it will …
30th October 2012
The government is fast approaching a “fiscal cliff”. An extraordinary session of parliament is meeting from Monday (29th), in which the government will try to force the passage of deficit-covering bills needed to finance 40% of spending this fiscal year …
29th October 2012
The main purpose of the Bank of Japan’s PolicyBoard meeting next Tuesday (30th) is for it toupdate its forecasts for GDP and inflation.Historically, policy setting has taken a backseat inthe second monthly meetings in April andOctober, however over the …
24th October 2012
The weakness in the global economy in the third quarter has weighed heavily on Japan’s exporters. Despite the small rise in September, exports fell sharply over the quarter as a whole and will act as a large drag on Q3 GDP. … Export slump will drag on Q3 …
22nd October 2012
The Japanese government has announced its intention to create a new stimulus package to boost the moribund economy and presumably revive the political fortunes of the ruling party. It is unlikely to succeed on either count. … Another impotent “stimulus” …
Japan’s economy almost certainly contracted in the third quarter after growth stalled in Q2. What’s more, available data for September show no sign of a turnaround, with business conditions, measures of confidence and auto sales all deteriorating. More …
18th October 2012
A sustained pick-up in bank lending helped support broad money growth in September, although the rate of expansion remains subdued. Household borrowing continues to be the main driver of bank lending growth. … Monetary Indicators Monitor …
17th October 2012
The auto industry in particular has been feeling the effects of the Chinese boycott of Japanese products following the protests over the disputed Senkaku/Diaoyu islands. In September Toyota and Nissan, two of Japan’s largest car manufacturers, announced …
15th October 2012
The fall in Japan’s machinery orders in September adds to a large body of evidence that the economy contracted in Q3. What’s more, there are increasing signs that the economy will contract again in Q4 as global growth softens, confidence tumbles and the …
11th October 2012
The continued sharp fall in confidence revealed in the latest Economy Watchers’ Survey adds to the evidence that the economy contracted in the third quarter. The outlook component is equally weak suggesting there is little hope for a rapid rebound. … …
9th October 2012
Japan’s economic relationship with China is important, but so is Japan’s relationship with other countries in Asia. These other economies account for a greater share of trade and outward foreign direct investment than China, and Japanese banks are …
8th October 2012
Today’s weak Tankan survey supports our long-held view that Japan’s economy will have contracted in the third quarter. What’s more, a further contraction in Q4 looks increasingly likely. … Tankan consistent with GDP …
1st October 2012
The latest figures on Japan’s economy were downbeat. We have been forecasting a contraction in Q3 GDP since June and nothing that has happened since has shifted that view. Industrial production has plunged and is set to contract further in September and …
On the face of it, the Bank of Japan’s Policy Board meeting next week looks like it will be a non event. The Board has acknowledged the weakening state of the domestic and global economy, and it extended the size and duration of its asset purchase scheme …
28th September 2012
The Bank of Japan’s Tankan Survey for September (to be released on Monday) will probably show a deterioration in business conditions in the third quarter, and predictions for the fourth quarter are likely to remain downbeat. … Tankan to signal weaker Q3, …
26th September 2012
Following the recent protests in China that have caused many Japanese firms to temporarily close factories and shops, in this Weekly we look at how the presence of Japanese companies in China has grown over the last two decades and how important China is …
24th September 2012
Monthly activity data show that Japan’s economy is entering a period of contraction, after the recovery stalled at the end of the second quarter. Consumer and business spending is falling, output is dropping fast as exports plunge, and hopes for a quick …
20th September 2012
Japan’s goods exports fell further in August as the slowdown in the global economy continued to weigh on trade. Unless exports have rebounded in September, and today’s flash PMIs from China and the euro-zone give no reason to think they have, net trade …
The Bank of Japan surprised markets today with a move that gave the impression of co-ordinated easing by the major global central banks, providing a welcome boost to confidence. However, we had already expected them to ease by this amount in October, so …
19th September 2012
Broad money growth remained weak in August but it picked up slightly amid a continued rise in bank lending. Household demand for credit remains firm but businesses are cutting back on borrowing from banks and increasing their use of other sources of …
17th September 2012
Leaked details of the government’s new energy plan suggest that nuclear power will be phased-out by the 2030s. In this Weekly we argue that the main reason Japan coped without nuclear power this summer was weakness in the economy, not something it would …
The Bank of Japan’s Policy Board will conclude its September meeting next Wednesday (19th), and is likely to leave policy settings unchanged despite concerns about the economic environment. The fact that policymakers in China, the euro-zone and (almost …
13th September 2012
The second successive monthly rise in Japanese core machinery orders in July, announced today, does not suggest business capital spending will expand in Q3. The level of orders remains low, firms expect a contraction over the quarter as a whole, and the …
12th September 2012
The Japanese government’s Business Outlook Survey suggests conditions improved slightly in Q3, with firms expecting further improvements over the next six months. Whilst clearly good news, the pick-up was much less than anticipated at the time of the last …
11th September 2012
The latest figures on the state of Japan’s economy in August were not uniformly bad, but as signs that the slowdown has bottomed out they were unconvincing. Our long-held view that the economy will contract sharply in Q3 is being increasingly borne out by …
10th September 2012
The government’s eco-car subsidy appears to have run its course. Although it provided a visible boost to car sales, which supported aggregate spending, the subsidy should not be given all the credit for the recent recovery in the sector. What’s more, …
7th September 2012
The acceleration in business capital spending revealed by the Ministry of Finance’s (MoF) investment survey was not enough to impress markets. Indeed, the headline annual figure is flattered by favourable base effects, while a q/q contraction is likely to …
3rd September 2012
The boost to industrial production from reconstruction spending appears to be fading. With no signs of a recovery in domestic private sector demand, and external demand set to remain weak, the outlook for industry is grim. … Industry struggling as …
31st August 2012
Slowing auto sales dragged down retail spending last month. Even sharper falls are likely when the funds for the eco-car subsidy run out, probably any day now. With few signs of support elsewhere in the economy, we think GDP will contract in the third …
30th August 2012
It was perhaps refreshing that last week there was at least one occasion when news from Japan drove markets elsewhere, rather than vice versa. Unfortunately, that news was bad, namely the weakness of Japan’s exports in July. We expect this downbeat tone …
24th August 2012
