Analysts from Mizuho Bank point out that trade tensions will be necessary to watch for its potential impact on Japan’s growth. They consider that if the US carries out its fourth round of tariff hikes on Chinese goods, they would send downward pressures upon the Japanese economy.
Key Quotes:
“Japan’s real GDP grew +2.1% q-o-q p.a. in the Jan-Mar quarter of 2019, recording growth in positive territory for the second consecutive quarter. However, since the main factor pushing up growth in the latest quarter was the fall of imports accompanying the decline of consumption and capital investment, the state of the Japanese economy actually lacked strength. The growth of personal consumption, mainly of durable goods, came to a pause. Capital investment and exports dipped into negative territory, reflecting the slowdown of the Chinese economy and IT demand.”
“FY2019 forecast on Japan’s GDP: +0.5% q-o-q p.a. The global economic slowdown and lingering uncertainties regarding US-China trade tensions are serving as drags upon the growth of exports and capital investment. Despite the continuation of a favorable employment environment, personal consumption will likely be tepid due to a slight deceleration of income growth because of the reduction of overtime hours stemming from Japan’s work-style reforms. However, the impact of the consumption tax hike should turn out to be milder than the period from 2014 to 2015 due to the implementation of various income support measures.”
“FY2020 forecast on Japan’s GDP: +0.5% q-o-q p.a. The rise of adjustment pressures upon capital investment will serve as restraints upon GDP growth. Even so, the reactionary decline following the 2020 Tokyo Olympic Games should turn out to be benign, given the current delay in progress of construction due to the shortage of construction workers.”
“Turning to the risks, it will be necessary for the time being to keep a close eye upon the escalation of trade tensions. In the event the US carries out its fourth round of tariff hikes upon Chinese goods, thus triggering retaliatory measures, they would send downward pressures upon the Japanese economy, and could lead to the possibility of a postponement of the consumption tax hike.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales
Bitcoin price continues to move further away from the $69,000 threshold, gaining ground as BTC bulls hope for a retest of the $73,777 peak. This is because of the general assumption that clearing this blockade would set the tone for a reach higher, marking a new all-time high.
Bears have been standing before a steamroller so far this year
Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.