Japan Loses Grip on Growth

Market Trends - 14/09/2016

Headwinds continue to face Japan’s economy as the Ministry of Economy, Trade and Industry adds additional distressing statistics into Japan’s basket. Industrial production has failed to meet preliminary results of a jump to 2.30% whereas August also reported a decline to -0.40%. A strong Japanese Yen is still weighing heavily on the world’s third biggest economy, affecting demand for Japanese goods as they become more expensive, while at the same time diminishing exports and trade balance. China’s slowdown, Japans biggest trading partner, amid a weak Yuan is just adding further to the pressure that is holding back Japan’s growth rate.

 

Prime Minister Shinzo Abe has strengthened fiscal policy, leading to a steeper rise in government debt with respect to GDP in an effort to help boost the economy. All eyes will be focused now on a highly anticipated BoJ meeting that is taking place on September 21st. Banks have been hit exceptionally hard on the speculation that the central bank may opt to cut down on long term bond asset purchases in, while keeping rates at record lows of -0.10%. BoJ Governor Kuroda alongside his Deputy Governor Nakaso highlighted the importance of the current low interest rates how they anchor the nation as the Yen climbs higher.

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