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16 Nov 2015
JPY: Japan once again falls in love with recession - MUFG
FXStreet (Delhi) – Derek halpenny, European Head of GMR at MUFG, notes that the official data from Japan today confirmed that the economy contracted by 0.2% Q/Q in Q3 following the 0.2% contraction in Q2.
Key Quotes
“The weakness was evident in business investment and inventories as Japanese companies remained cautious over the outlook for growth. Inventories took 0.5ppt off overall real GDP growth while the 1.3% Q/Q drop in business investment shaved a further 0.2ppt from growth. The key area of strength was household consumption, which added 0.3ppt to growth. Net exports also added 0.1ppt.”
“The positive in the report is of course the fact that the notable reduction in the level of inventories bodes well for a rebound in industrial production after the understandable concerns after the devaluation of the renminbi in August. But the weakness in business investment will be a worry and after the initial rebound in business investment after the BOJ policy stimulus, investment has been weak underlining the lack of confidence in the outlook for growth.”
“We see little in the way of policy implications from this data – certainly we see nothing from the BOJ who will hold a monetary policy meeting on Thursday. If there is a response it may come in the form of a fiscal stimulus package but this would only amount to a relatively small package with little in the way of macro-economic implications or for the direction of the yen, which will remain determined by Fed policy in the US and broader risk sentiment.”
Key Quotes
“The weakness was evident in business investment and inventories as Japanese companies remained cautious over the outlook for growth. Inventories took 0.5ppt off overall real GDP growth while the 1.3% Q/Q drop in business investment shaved a further 0.2ppt from growth. The key area of strength was household consumption, which added 0.3ppt to growth. Net exports also added 0.1ppt.”
“The positive in the report is of course the fact that the notable reduction in the level of inventories bodes well for a rebound in industrial production after the understandable concerns after the devaluation of the renminbi in August. But the weakness in business investment will be a worry and after the initial rebound in business investment after the BOJ policy stimulus, investment has been weak underlining the lack of confidence in the outlook for growth.”
“We see little in the way of policy implications from this data – certainly we see nothing from the BOJ who will hold a monetary policy meeting on Thursday. If there is a response it may come in the form of a fiscal stimulus package but this would only amount to a relatively small package with little in the way of macro-economic implications or for the direction of the yen, which will remain determined by Fed policy in the US and broader risk sentiment.”