Japan: Economic outlook revised down – Mizuho Bank


Analysts from Mizuho Bank consider that the global economy will continue to slow down due to the escalation of US-China trade tensions and they lowered GDP forecast for Japan. 

Key Quotes:

“Reflecting the mounting possibility that the US will launch its fourth round of punitive tariffs upon Chinese goods, we have revised down our outlook on the economy premised upon such launch. The global economy should continue to slow down in 2020. Even though the US will most likely avoid the “fiscal cliff” in 2020, a “no-deal Brexit” in addition to US-China trade tensions will serve as downward pressures.”


“In FY2019 and FY2020, the Japanese economy will continue to record tepid growth due to the rise of adjustment pressures on capital investment and durable goods consumption. Given the cautious stance among corporate enterprises about raising sales prices, the rise of the core CPI (excluding the impact of the consumption tax hike) is forecast to moderate.”

“The Bank of Japan (BOJ) will keep monetary policy unchanged until it determines the impact of the consumption tax hike. Even though the BOJ will most likely address a downshift of the economy merely by tweaking its forward guidance, it could resort to pushing interest rates further down into negative territory in the event of a sharp appreciation of the yen.”

“Forecast on the rate of Japan’s GDP growth: FY2019 (+0.7% q-o-q p.a.), FY2020 (+0.4% q-o-q p.a.). A recovery in exports is unlikely, considering negative pressures stemming from the rise of uncertainties due to the fourth round of punitive tariff hikes by the US. Production activity should also remain stagnant for some time.”

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