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The imminent retirement of Prime Minister Koizumi is likely to raise concerns that “reform fatigue” will start to undermine the Japanese economy and markets. In this Focus we assess the risks to Koizumi’s legacy and suggest some pointers to gauge whether …
13th September 2006
Recent monthly indicators from the consumer sector have been surprisingly weak. This contrasts with the strength of household spending in the GDP data over the last year or so, and raises concerns that the Japanese consumer is beginning to flag. In this …
30th August 2006
The markets appear increasingly complacent over the outlook for Japanese interest rates. In part this reflects three common misunderstandings about the inflation data: the impact of base year revisions, the implications of excluding energy costs from the …
22nd August 2006
Today’s strong Tankan survey of business confidence in the second quarter paves the way for the Bank of Japan (BoJ) to raise interest rates, most likely at its next meeting on July 14th. Although most analysis just looks at the headline index of …
3rd July 2006
Our latest monthly review of the key data has made us a little more cautious about the prospects for the Japanese economy, despite the upward revisions to first quarter GDP. We still expect the Bank of Japan to raise interest rates shortly and by more in …
24th June 2006
The positive trends in both business and consumer confidence suggest domestic demand will remain firm, helping to offset slower global growth and a stronger yen. Spare capacity is now largely eliminated and underlying inflationary pressures are set to …
24th May 2006
The highlight of the past month was the upbeat Tankan survey of business confidence, which showed a broadening economic recovery with diminishing spare capacity and a tightening labour market. This represents one of the last nails in the coffin of the …
24th April 2006
Our monthly review of the key data in Japan finds some mixed signals in the official data. There are signs of renewed weakness in the monthly series on consumer spending and the downward trend in unemployment appears to have faltered. Nonetheless, this …
24th March 2006
Net exports have played an important role in supporting Japan’s economic recovery, contributing around 30% of the increase in GDP since 2002. This has raised concerns over the vulnerability of the economy to a global downturn and therefore over the …
15th March 2006
The Bank of Japan left policy unchanged at the end of its monthly rate-setting meeting on 9th February, but we do not expect it to wait much longer. The data summarised here in our monthly review show a strengthening economic recovery and fading …
24th February 2006
The economic recovery appears to have strengthened further in the fourth quarter of last year. Private consumption should continue to grow strongly, although business investment may slow slightly. Encouragingly, forward-looking indicators and surveys of …
24th January 2006
Both the Bank of Japan and the consensus of outside forecasters expect deflation to persist in Japan well into 2006. In contrast, we expect inflation to return this year. With next-to-nothing in terms of interest rate increases priced into the futures …
15th May 2005
