Looking at the economy overall, Buskas notes, “you have strong external sectors from exports. And, the business side of the economy is doing well. But the consumer side of the economy is not doing well.”
Goldstein agrees that one of the biggest problems facing Japan was to get the consumer market up and running again after a long period of dormancy.
The bottom line for Japan is that the consumer needs to shift away from their high savings rate and start spending to bolster domestic demand.
While most economists believe deflation is now a thing of the past for Japan, Buskas is not so certain.
“It’s not very clear whether Japan actually has defeated the deflation drag,” she notes.
She cites the second-quarter GDP deflator as evidence. That figure posted a -0.8 percent year-over-year reading, reflecting weak pricing power. Also, in July, real wages fell 1.0 percent on a year-over-year basis.
After years of easy money, the Bank of Japan hiked the overnight rate to 0.25 basis points in July. Analysts do not foresee additional hikes at the Oct. 13 or Nov. 16 meetings.
Subscribe to:
Post Comments (Atom)
Post a Comment