Trouble Ahead for the Japanese Economy?

Arslan Butt•Friday, October 11, 2019•1 min read

Japan could see its core CPI decline to a two-year low in September, according to a recent Reuters poll. Core CPI, excluding fresh foods but including oil products costs, is expected to come in at +0.3% YoY in September, lower than the +0.5% reading in August. This is the lowest reading for Japan’s core CPI since April 2017.

The Japanese economy has been suffering on account of the ongoing US-China trade war as China is one Japan’s leading trade partners. Despite sluggish exports, the Japanese economy had remained supported by strong domestic demand in recent months. However, a decline in inflation reveals a possible weakening in demand among Japanese consumers, which could spell trouble for the economy.

What’s even more worrying for Japan is that a majority of companies expect the recent sales tax hike to further hurt the economy. According to another Reuters poll, around 69% of companies anticipate the sales tax hike from 8% to 10% to not only put an end to the expansionary phase of the Japanese economy but also push it towards a recession in the months ahead.

The tax hike could have an adverse impact on consumer sentiment, which could further dent the economy’s performance. Around 58% of companies expect economic growth to stagnate into the next year, while around 41% anticipate a recession. Only 1% of companies hope for economic growth to be in positive territory in the near future.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.