Asia country report Japan 2019

Landrapport

  • Japan
  • Generell økonomisk

28 mars 2019

Japan´s export growth will slow down due to lower global trade expansion, but domestic demand will underpin the economic expansion of about 1% in 2019.

asia jap 2019 pic1asia jap 2019 pic3

Economic situation

Growth slowed down again in 2018

Japanese GDP growth slowed to below 1.0% in 2018, mainly due to a less accommodating external environment and the fading out of fiscal stimulus, while business investments kept up. In 2019 the economy is expected to expand at about the same rate.

asia jap 2019 pic4

Export growth will slow down due to lower global trade expansion, less demand from China and the increased risk of protectionism. However, domestic demand is expected to underpin the economic expansion as unemployment is decreasing further and wages are rising. A consumption tax hike due in October 2019 will most probably weigh on spending, but the government has announced it will offset the effect with additional public expenses. Business investment continues to increase, driven by higher R&D spending for new technologies and the 2020 Olympics in Tokyo.

Consumer prices are expected to remain far below the 2% target set by the government. Therefore, the Bank of Japan is expected to maintain its very loose monetary policy for the time being, with negative interest rates unchanged in 2019.

The burden of excessive government debt and other challenges

Following a long period of loose fiscal policy, the Japanese government is struggling with extremely high public debt (about 225% of GDP in 2018). Japan relies mostly on domestic creditors to support its government debt (about 90% is held by Japanese investors), which makes the funding base less susceptible to capital flight. But maintaining such a high level of debt is costly, and further increasing government debt would at some point render it unsustainable.

In addition to high government debt, the country faces demographic challenges: the population is shrinking and the working age population is also declining. Without appropriate measures, Japan will inevitably face a shrinking tax base and rising expenditures on retirement benefits. Many industries already face some difficulties due to labour shortages, leading to higher labour costs, which is hurting their international competitiveness.

To achieve a sustainable rebound and to boost the country’s long-term economic performance, there is an urgent need to make the labour market more flexible, to end protection for farmers, doctors and pharmaceutical companies, and to introduce more business deregulation. The government has repeatedly announced its intention to tackle those issues in its current term, but major reforms are still vehemently opposed by powerful interest groups. Still it remains to be seen if and when deep structural reforms will be made.

 

 

 

 

 

 

 

Relaterte dokumenter

Ansvarsfraskrivelse

Fremstillingene som er gitt her er kun generell informasjon, og skal ikke stoles på eller brukes som grunnlag for noe formål. Vennligst referer til selve polisen eller den aktuelle produkt- eller serviceavtalen for de styrende vilkårene. Ingenting i dette dokumentet skal tolkes til å skape noen rett, plikt eller ansvar fra Atradius' side, inkludert noen forpliktelse til å gjennomføre tilbørlig aktsomhet (due diligence) for kjøpere eller på dine vegne. Hvis Atradius gjennomfører tilbørlig aktsomhet for en kjøper, er det for egne underwriting-formål, og ikke til fordel for den forsikrede eller noen annen. I tillegg skal Atradius og tilhørende og tilknyttede selskaper og datterselskaper ikke i noe fall være ansvarlig for noen direkte, indirekte, spesielle eller tilfeldige skader eller følgeskader som følge av bruk av de fremstillinger som det er gitt informasjon om her.