Friday August 23, 2013 - 14:27:55 GMT
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Japanís Economic Recovery Remains on Track
Economic Recovery Remains on Track
polls suggest that the Japanese economy will continue to recover this year, on
the back of promising consumer spending, and despite a near-record trade
Japan has been one of the only reliable performers
in the Asia-Pacific markets, with the major regional indexes ex-Japan seeing
severe drops recently. Emerging economies such as India and Indonesia have been
hit extremely hard. Japanese Prime Minister Shinzo Abeís recovery efforts have
been buoyed in particular by rapidly rising exports.
According to the Ministry of Finance,
year-on-year Japan has seen a 12.2 percent increase in exports, with a 7.4
percent rise coming in June. This is certainly positive news, even despite ever
climbing imports, which now stand at 19.6 percent. The trade deficit is the third
largest since records began in 1979, at $10.5 billion (1.02 trillion yen).
Thereís little doubt that the large
increase in exports is down to renewed demand from Europe and the United
States. The Eurozone has recently exited recession, and the US has been one of
the best performers in the efforts for global recovery. Japanese policymakers
have been actively working to devalue the yen, which has also clearly had
positive effects on exports.
Exports to the EU have increased by 16.6
percent year on year, and 8.6 percent in June. US exports have jumped by 18.4
percent for the year, and 14.6 percent in June.
Japanese economists are not particularly
concerned by the scale of the trade deficit, as a great deal of its increase
can be attributed to particularly expensive energy prices. They are expected to
drop sooner or later. There are also forecasts for exports to continue their
upward trend, particularly through the technology and automotive industries. The
Nikkei 225 has had mixed fortunes recently.
Most economists are of the opinion that the
trade deficit will become a surplus several months into 2015.
Toyota, the largest car manufacturer in Asia,
and the third largest in the world, posted profit forecasts of 1.48 trillion
yen ($15.2 billion) for the fiscal year ending March 2014, up from previous
estimates. A weaker yen has undoubtedly helped increase export volumes for the
automotive giant, and numerous other Japanese conglomerations.
It should be noted that Japanís import
figure was 3.6 percent higher than expected, and was the largest increase in
three years. As already stated, this is partially down to energy costs;
following the 2011 earthquakes, the country is reliant on fossil fuel imports. As
a result, the trade shortfall was almost 200 billion yen larger than a recent
Bloomberg poll had suggested it would be.
Japanese growth is slowing, and as a
result, next yearís figures are not expected to be as strong.
Overall growth in the country has slowed
down slightly. For the period of April to June 2013, the rate declined to 2.6
percent, some 1.2 percent less than the quarter before. There is a tax increase
planned for April however, and it is likely that the economy will in fact
shrink by 4.3 percent in the following quarter. Growth should follow however.
Chinaís economic slowdown is currently at
odds with a housing market thatís seeing large price increases. Year on year
jumps of up to 17 percent are a problem in many of the countryís major cities,
and it seems that the government has resigned itself to allowing houses to be
unaffordable in the short term.
India, Malaysia and Thailand are all
currently struggling, with the Indian rupee having hit a record low. Year on
year, Thailandís GDP growth has slowed from an encouraging 5.4 percent in the
first quarter, to 2.8 percent in the second.
Alpari report that the Japanese BOJ governor Haruhiko Kuroda will attend this yearís
Jackson Hole later in the week, which is expected to be a non-event, with many
central bankers missing.
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