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Japanese economy likely to grow 1.2 pct in 2018, may ease slightly in 2019-2020

Japan’s economy is moving ahead well as per the recent Japanese standards, with the real GDP growing 1.2 percent year-on-year in the first half of 2018. Business investment has been strengthened by corporations’ healthy balance sheets and stimulative fiscal and monetary policies, while a tightening labor market is likely to lift wages and underpin household spending, noted Scotiabank in a research report.

Strong global demand is seen in the nation’s export sector activity. Nevertheless, with the U.S. and China being Japan’s two significant export markets, the U.S.-China trade conflict along with the U.S.’ protectionist biases pose a downward risk to the Japanese growth outlook. The scheduled consumption tax rate hike is likely to trigger growth volatility in 2019.

“We expect Japan’s real GDP to expand by 1.2 percent this year, followed by an average gain of 1 percent y/y in 2019‒2020, which is virtually in line with the economy’s potential”, added Scotiabank.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Japanese Yen was highly bullish at 162.111, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -51.2908. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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