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Japan: Medium-term bullish on JPY – Standard Chartered

Analysts at Standard Chartered Bank now expect GDP to contract 1.5% in 2020 and are medium-term bullish on the Japanese yen.

Key quotes

“We downgrade our 2020 GDP growth forecast further to -1.5% from -0.1% due to the negative impact of coronavirus on Europe and the US, and weaker-than-expected data from China.”

“We now see GDP contracting 1.0% q/q in Q1, versus our prior expectation of 0.3% growth, and expect Q2 growth to be slower than we previously expected.” 

“We raise our 2021 growth forecast to 1.1% from 0.8%, based on our expectation that the economy will start to gradually recover from end-Q2.”

“The BoJ has focused on liquidity operations and asset purchases, while peer central banks have embarked on aggressive monetary easing. This policy divergence is a medium-term bullish JPY driver, in our view.”

 

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