Japan’s macroeconomic outlook
2023-01-10
■ The momentum of external demand is slowing down, but with the support of policy, domestic demand has developed steadily
■ Due Bank of Japan normalization observations run high amid sudden policy shift
In Japan, affected by the worldwide economic slowdown, the recovery of foreign demand slowed down, and the production of mining industry (October: 3.2% lower than the previous month) stagnated. In addition, due to the impact of hyperinflation, the trend of real household income reduction is strengthening. However, due to the government's support for national tourism, the delayed demand is being aroused. At the same time, the tourism industry and related industries have also been recovered. From the perspective of demand, domestic demand has maintained a solid foundation.
The Bank of Japan's short view of the industry situation survey in December showed that the DI · current status index of large enterprises · manufacturing industry (current status: 7, prospect 6) declined for four consecutive quarters, while the large enterprises · non-manufacturing industry (current status: 19, prospect 11) rose sharply. In terms of the outlook index, large enterprises, manufacturing and non-manufacturing industries all began to decline from the current situation index, showing a cautious outlook. The business trend index in October showed that the consistent CI (down 1.2 percentage points on a month-on-month basis) fell for two consecutive months in the case of the trend decline of the leading CI (up 0.4 percentage points on a month-on-month basis), indicating that the momentum of business expansion is weakening. Even when the real income of households is decreasing in a trend, according to the comprehensive economic measures decided by the Cabinet meeting on October 28, it is expected that the economy will be supported while easing the real income decline.
In November, the national consumer price index (excluding the core CPI of fresh food: 3.7% higher than last year) further accelerated, and has continued to rise sharply since the first half of the 1980s. With the transfer of food and other prices, high inflation is currently expected to continue. The Bank of Japan decided to re-evaluate the application of long and short interest rate operation (yield curve control) at the financial policy decision meeting on 19th and 20th. Increase the change range of long-term interest rate to about 0.5%, and increase the purchase amount of national debt to about 9.0 trillion yen per month in order to curb the sharp change. The expansion of the long and short interest rate gap has expanded the scope for the normalization of policies such as getting rid of negative interest rates. In January 2023, the "economic and price situation outlook" will be updated. When the price forecast is raised, the policy revision observation will be further improved.