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Japan: Grim economic outlook – Standard Chartered

Japan is scheduled to release capital spending data for Q4-2019 on 1 March, to release January household spending data on 5 March and  to publish the preliminary Leading Index (LI) for January on 6 March. Economists at Standard Chartered Bank analyze the probable data.

Key quotes

“Excluding software, we believe core capital spending fell 3.3% y/y, roughly in line with the latest business capex reading, which also fell 3% y/y in Q4. Corporate spending likely dropped as Japanese businesses faced weak overseas demand and due to concerns over household spending after the consumption tax hike to 10% (from 8% previously) in October 2019.”

“We believe inflation-adjusted household spending fell 5.0% y/y, posting negative growth for a fourth straight month. Of concern, household spending and corporate investment may have remained soft, which is likely to drag down headline GDP growth in 2020.” 

“We believe the LI fell 1.7% m/m to 90.0, the weakest reading since September 2009. The LI, which tracks key PMI indicators in key markets such as the US, Europe and China, has largely remained in a downward trend since early 2018 on uncertainty over US-China trade tensions and slowing growth in China.”


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