UCF Global Perspectives


Japan’s Government Downgrades Economy View

Michelle Murillo, Lawrence J. Chastang Global Fellow

March 20, 2019

Japan’s government downgraded its assessment of the economy for the first time in three years, blaming the U.S.-China trade war (Reuters). On Wednesday, the Cabinet Office shared that exports and output are at a weakness and could continue for an unspecified amount of time (Reuters). Industrial outputs had its sharpest decline in January from tariffs slowing China’s economy and subsequently reducing demand for phone parts and chip-making equipment from Japan (Reuters). Bloomberg Economics’ Yuki Masujima expects a 2.5 percent annualized contraction (BB).

The Bank of Japan will maintain short-term interest rates at -0.1% and target bond yields at around zero (AN). They will also increase holdings by 716 billion USD a year and continue purchasing JGBS (AN). Meanwhile, a Cabinet Office official relayed that consumer spending and capital expenditure have remained stable and may mitigate the effects of weak exports and output (Reuters). Remaining concerns are focused on the impending tax raise in Japan to 10 percent and suspicions of companies cutting capital expenditure due to uncertainty about policy turnouts (Reuters).






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