Japan’s Contraction Questions Abenomics

Japan’s economy shrank by 0.4 percent in the October-December quarter — the second time the country posted negative growth in 2015 after another down quarter in the January-March period. Since the start of 2016, financial markets have been rattled by worries of economic slowdowns overseas, which could affect Japan’s business environment as well. The economic growth engine of a low yen and high share prices promised by the administration of Prime Minister Shinzo Abe looks like it may be sputtering.

“Nobody knows which way the currency markets will go,” says senior Mazda Motor Corp. executive Tetsuya Fujimoto. Fumiya Kokubu, president and CEO of trading giant Marubeni Corp., similarly told the Mainichi Shimbun that resource prices “have been volatile since the New Year. No one has any real idea where they’ll be at the end of March,” the close of fiscal 2015. Meanwhile, many of the corporate financial reports for the first three quarters of this fiscal year — released between late January and early February — warned of ever greater uncertainty about where the financial markets were going.

Meanwhile, slowdowns in the Chinese market and the economies of other emerging nations are influencing corporate performance. Already, electronics maker Hitachi Ltd. Executive Vice President Toyoaki Nakamura has said that “slowdowns in resource-based economies and in China” are behind Hitachi revising its projected earnings for fiscal 2015 downward.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza