Japan is relying heavily upon export acivity
- Monday, May 22, 2017
Japan’s economy expanded at a faster than expected rate in Q3 due to higher exports resulting in Japan’s GDP growth rising to an annualised rate of 2.2%. This was the third consecutive quarter of expansion.
There are concerns that a Trump presidency will hurt Japan if anti-trade rhetoric becomes a reality. Since the election, the ¥ has been falling against the US$ making Japanese goods cheaper abroad. For Japan and its big export reliance, this is good news.
There are concerns however that domestic demand is weak and Japan is relying heavily upon export activity. In order to counter this weak consumption, the Japanese cabinet has attempted to boost growth through spending with another economic stimulus package worth more than US$275bn.
At October’s meeting of the Bank of Japan (BoJ), the timeline for hitting its 2% inflation target was pushed back again. This is the fifth push back since QE programmes were started in 2013. This has again raised questions about the country’s economic recovery.
Chris DaviesChartered Financial Adviser
Chris is a Chartered Independent Financial Adviser and leads the investment team.