Japan Economic Forecast

Japan Economic Outlook

April 30, 2018

Economic growth likely lost some momentum in Q1 as higher inflation and low wage increases weighed on consumer spending. Moreover, industrial production lost some steam in the period, while business confidence among large manufacturers moderated for the first time in over two years. That said, the shock is expected to be temporary, and the economy should continue posting solid growth rates throughout the rest of the year. External demand should recover in Q2 due to still resilient economic activity among Japan’s main trading partners, while a robust job market and works related to the 2020 Tokyo Olympics will boost domestic demand. In an attempt to strengthen the relationship between the two countries, on 18 April Prime Minister Shinzo Abe and U.S. President Donald Trump pledged to increase trade and investment between Japan and the U.S.

Japan Economic Growth

The economy will grow this year on the back of the Bank of Japan’s (BoJ) ultra-loose monetary policy, healthy external demand and renewed fiscal support. Moreover, a tight labor market will continue to shore up household spending. The brewing trade war between China and the U.S., as well as a possible sudden slowdown in China are the main downside risks to Japan’s economic outlook. Met the why particular panelists see the economy growing 1.3% in 2018, which is unchanged from last month’s forecast, and 1.0% in 2019.

Japan Economy Data

20132014201520162017
Population (million)127127127127126
GDP per capita (USD)11,11138,34634,42539,089-  
GDP (USD bn)5,1174,8754,3714,960-  
Economic Growth (GDP, annual variation in %)2.00.31.11.0-  
Domestic Demand (annual variation in %)2.40.30.70.4-  
Consumption (annual variation in %)2.4-0.9-0.40.4-  
Investment (annual variation in %)5.02.70.11.0-  
Exports (G&S, annual variation in %)0.79.33.01.1-  
Imports (G&S, annual variation in %)3.28.30.7-2.3-  
Industrial Production (annual variation in %)-0.62.1-1.2-0.2-  
Retail Sales (annual variation in %)1.01.7-0.4-0.6-  
Unemployment Rate4.03.63.43.1-  
Fiscal Balance (% of GDP)-8.5-6.2-5.4-  -  
Public Debt (% of GDP)202200197199-  
Money (annual variation in %)4.23.63.13.9-  
Inflation Rate (CPI, annual variation in %, eop)1.72.40.10.3-  
Inflation Rate (CPI, annual variation in %)0.42.80.8-0.1-  
Inflation (PPI, annual variation in %)1.23.2-  -  -  
Policy Interest Rate (%)0.110.110.11-0.11-  
Stock Market (annual variation in %)56.77.19.10.4-  
Exchange Rate (vs USD)115.3119.7120.3116.9-  
Exchange Rate (vs USD, aop)97.63115.9121.1118.8-  
Current Account (% of GDP)0.90.83.13.8-  
Current Account Balance (USD bn)45.837.1134187-  
Trade Balance (USD billion)-117.5-122.4-23.337.0-  

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Japan Facts

ValueChangeDate
Bond Yield0.06-4.41 %May 21
Exchange Rate111.1-0.35 %May 21
Stock Market23,0020.11 %May 21

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