Japan Business Forecast Report Q1 2015 - New Market Study Published

Core Views

* There are few good options available to the Japanese government to address its ballooning debt load, but we believe that debt monetisation could prove to be the most costly in terms of its medium-term economic impact. The government could find itself facing high inflation, stagnating economic activity, and rising pressure on bond yields if current policies persist. We maintain our bearish view on local assets given these growing risks.
* Japan's Q413 GDP release does not make for optimistic reading. While real GDP came in at 1.0% q-o-q seasonally adjusted annualised, it marked the third consecutive quarter in which growth has slowed, showing the diminishing marginal returns of the ongoing monetary and fiscal stimulus measures. From a full-year 2013 growth rate of 2.7%, we expect to see a drop to 1.3% in 2014, which compares with consensus expectations of 1.5%. Even this relatively downbeat growth forecast faces serious downside risks.
* Japan's trade figures for January missed expectations by a wide margin, with imports surging and exports stagnating. We expect to see the country record a current account deficit in 2014 as the weaker yen is insufficient to counteract the structural forces at play. Beyond 2014, the deficit is likely to widen as policies aimed at creating inflation will seriously undermine the domestic savings rate.
* Inflationary trends in Japan are picking up pace rapidly. This trend is one which is likely to remain in place over the medium term, and we could even see concerns arising that inflation is rising too rapidly before long. The decision by the Bank of Japan (BoJ) to explicitly target a 2.0% y-o-y inflation rate back in 2013, via increasing government bond monetisation market a major turning point for the economy's inflation outlook. While we have seen an increase in loan growth over the past 12 months, by far the largest increase in liquidity has been driven by the government spending via fiscal deficits.
* Prime Minister...

Full Report Details at
- http://www.fastmr.com/prod/900624_japan_business_forecast_report_q1_2015.aspx?afid=301

The Japan Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Japan and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Japan's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

* Forecast the pace and stability of Japan's economic and industry growth through end-2018.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.

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