Japan Q3, FY22 growth seen weaker as global economy stutters

TOKYO, July 19 (Reuters) – Japan’s economy is expected to grow more slowly than expected for the rest of the fiscal year, a Reuters poll showed, as growing fears of a global recession and the resulting financial crisis plagued Japanese retailers.

Manufacturers in the world’s third-largest economy are vulnerable to economic growth in major economies such as the United States and China that are causing financial panic and financial instability around the world. read more

However, experts indicate that Japan will grow well in the fiscal year until next March, the survey showed, due to the expected return, which accounts for half of the gross domestic product.

The economy is expected to expand 3.1% annually this quarter, the median forecast of 36 economists in a July 4-15 survey showed, lower than the 3.5% estimated in a June survey.

Economists in the survey lowered the growth figures for October-December and January-March slightly, while they cut the figures for the last quarter more sharply, to 3.2% from June’s 4.1%.

“What’s driving the recession is the growing US economy,” said Harumi Taguchi, chief economist at S&P Global Market Intelligence.

China’s zero-coronavirus policy could also lengthen the bottlenecks for Japanese suppliers, he said.

Japanese exporters have been hit hard by the continued rise in commodity prices after Russia’s invasion of Ukraine and measures to contain COVID-19 in Chinese plants this year. read more

Analysts in the study expect that industrial production in Japan contracted by 3.8% in April-June from last year, which will be followed by a small recovery of 2.2% in July-September.

At home, the economy is expected to continue to benefit from a recovery in domestic spending on business needs such as travel following the lifting of the coronavirus outbreak in March.

“Inflation does not appear to be slowing down consumer spending, although the impact could be large if delayed,” said Takumi Tsunoda, an economist at the Shinkin Central Bank Research Institute.

The recent rise in coronavirus cases has added to uncertainty about the decision to drink alcohol, he said.

The median estimate of economists in the survey showed Japan’s annual inflation rate reaching 2.4% in October-December and in line with the Bank of Japan’s target of 2.0% early next year.

But nearly 90% of analysts said any easing of the BOJ’s policy won’t happen until 2023 or later.

KEEP YOUR ENERGY FIRST

When asked which areas the government should focus on after the July 10 election of the upper house, which led to the decisive victory of Prime Minister Fumio Kishida’s governing coalition, 19 out of 27 economists, or 70%, said the energy policy.

Japan’s prime minister said on Thursday he had asked the industry minister to keep nine nuclear reactors in operation this winter, as power grows. read more

Twelve respondents chose “foreign policy/security” in the two-choice question, while six chose “public security” and “rising prices”.

Five economists chose “the COVID-19 pandemic”, two said “increase in wages”, two selected “changes in income” and one said “the way to grow”.

Asked about the biggest impact on Japan’s economy if the heat wave continues through the summer, 12 out of 27 economists said it would be bad for consumption and production, citing risks of power shortages.

Another eight said consumption would increase due to hot temperatures but it would be negative for production, while five said it would be good for consumption and excretion.

“Continuing heat will help consumers spend more on tourism and accommodation as well as energy-efficient and energy-efficient air conditioners,” said Chiyuki Takamatsu, an economist at Fukoku Mutual Life Insurance.

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Kantaro Komiya reports; Voting by Arsh Mogre and Anant Chandak; Edited by Daniel Leussink and Jonathan Cable

Our Standards: Thomson Reuters Trust Principles.