Japanese central bankers are debating a possible downgrade in the Bank of Japan\u2019s (BOJ) economic outlook amid weak exports, sluggish domestic consumption, and rising international risks.<\/p>\n\n\n\n
Kristian Rouz \u2014 The Japanese economy continues to show signs of lingering weakness amid faltering exports, sluggish domestic consumption, and the excessive amount of real and potential overseas risks. Bank of Japan (BOJ) policymakers say, albeit their assessment of economic health remains unchanged for now, that the forecast might be in for a downgrade later this year.<\/p>\n\n\n\n
According to BOJ officials, the regulator is considering lowering its GDP growth expectations for the past fiscal year that ended on 31 March, and in the fiscal 2019\/20. Policymakers say weaker-than-expected industrial output over the past few months, as well as underperforming inflation cast doubt over their previous assessments \u2014 although for now, the broader picture appears to be stable.<\/p>\n\n\n\n
he BOJ currently expects economic growth to come in at 0.9 percent for the fiscal 2018\/19. The figure could remain unchanged in the current year.<\/p>\n\n\n\n
Economists say the biggest risk facing central bankers is the weak inflation, which has yet to reach the BOJ\u2019s 2-percent target \u2014 after years of unconventional monetary stimulus, zero-and-negative interest rates, and steady domestic investment.<\/p>\n\n\n\n
\u201cThere simply isn\u2019t enough momentum toward 2 percent inflation, because wages are not rising that much\u201d, Hiroshi Miyazaki of Mitsubishi UFJ Morgan Stanley Securities said. \u201cThe BOJ became passive last year because it was worried about banks\u2019 earnings. This year the BOJ could fine tune its policy if other economic indicators worsen further\u201d.<\/em><\/p>\n\n\n\n According to a separate report from the Japanese government, the broader macroeconomic picture is hardly encouraging \u2014 albeit it is far from being disastrous either. The Cabinet Office said its assessment of economic health was unchanged in April from the previous month due to a fall in national exports, which have declined for four consecutive months.<\/p>\n\n\n\n Officials said Japan\u2019s shipments to Mainland China had dropped amid the ongoing Sino-American trade tensions \u2014 which pose risks of disruptions in their trade with third-party countries.<\/p>\n\n\n\n Additionally, the Cabinet Office said the recovery in Japan\u2019s consumer spending has been slow this year due to the weak inflation and a lacklustre performance of the industrial sector. Japanese manufacturers are reliant on the exports of electronic parts and equipment to China \u2014 where these products are used to manufacture the lion\u2019s share of goods bound for the US.<\/p>\n\n\n\n The Japanese government also said that the slow progress in trade talks between the US and China poses a risk of extended uncertainty \u2014 which could hold back Japan\u2019s economic momentum.<\/p>\n\n\n\n BOJ policymakers say these factors will likely prevent Japan\u2019s inflation rate from gaining any momentum until the year 2021.<\/p>\n\n\n\n \u201cInflation is holding up but isn\u2019t accelerating much either\u201d, an anonymous BOJ official said, as quoted by Reuters. \u201cInflation will gradually head toward 2 percent but the pace will be moderate at best\u201d.<\/em><\/p>\n\n\n\n Amid these latest developments, some officials and economics experts are calling on the Japanese government to postpone its planned hike in sales tax from 8 to 10 percent \u2014 saying the move could further impair the fragile economic expansion.<\/p>\n\n\n\n Government officials disagree, saying the hike is necessary to bolster Japan\u2019s budget sustainability, as it faces an elevated debt-to-GDP ratio of roughly 300 percent.<\/p>\n\n\n\n The sales tax hike to 10 percent is needed the most to secure stable financial resources to pay for social security for all generations, in order to cope with the ageing population\u201d, Finance Minister Taro Aso said. \u201cWe will proceed unless a big incident like the Lehman shock occurs\u201d.<\/em><\/p>\n\n\n\n The cabinet, however, pledged some $17.9 bln in additional government investment to offset the possible negative effects of the tax hike to consumer demand.<\/p>\n\n\n\n Meanwhile, the BOJ are not convinced Japan will be able to avoid all the risks to its economic expansion this year \u2014 unless the US-Chinese trade talks wrap up sooner than expected, and Japan is able to subsequently strike a US trade deal of its own.<\/p>\n\n\n\n This scenario, however, appears to be unlikely. The BOJ is set to hold its next policy meeting on 24-25 April. Economists believe Japan\u2019s base interest rates will remain unchanged at \u20140.1 percent, with near-zero yields as part of the ongoing effort to boost business activity and consumer confidence. Japanese central bankers are debating a possible downgrade in the Bank of Japan\u2019s (BOJ) economic outlook amid weak exports, sluggish domestic consumption, and rising international risks. Kristian Rouz \u2014 The Japanese economy continues to show signs of lingering weakness amid faltering exports, sluggish domestic consumption, and the excessive amount of real and potential overseas risks. Bank of Japan (BOJ) policymakers say, …<\/p>\n","protected":false},"author":1,"featured_media":1542,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20,57],"tags":[160],"class_list":["post-1541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-shipping-news","tag-japan"],"_links":{"self":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/1541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/comments?post=1541"}],"version-history":[{"count":0,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/1541\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media\/1542"}],"wp:attachment":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media?parent=1541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/categories?post=1541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/tags?post=1541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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