Japan Economic Update
Japan has been experiencing the longest period of uninterrupted growth since the 1980s, however, recent indicators possibly point to some rough sailing ahead. Exports have posted 15 consecutive months of growth, registering a 1.8% gain in February. From the beginning of January to the end of March, Japan’s Nikkei 225 equity index fell close to 14% to the low 21,000 level. With the imposition of new US tariffs on steel and aluminum there is growing concern Japanese exporters will be caught up in rising trade tensions. International trade uncertainty is also resulting in a strengthening of the Japanese yen from the 112 level to USD in January to the 105 level by late March.
Bank of Japan Governor Kuroda was reconfirmed for a second 5 year term and is widely expected to keep in place his monetary easing policies. But after 5 years of aggressive monetary easing, Japan’s core consumer prices are only rising at about 1% annually or half of the BOJ target. Economists also suggest that the BOJ stimulus program may have already reached its limits in terms of effectiveness.