BoJ Could Increase Stimulus After Sales Tax Rise

Japan’s annual export growth in February was short of market expectations and a Bank of Japan policymaker warned about the outlook as the world’s third-largest economy faces a sales tax hike next month that could dent economic activity.

The weaker-than-expected trade data comes after a Reuters poll showed that business confidence was largely steady in March, but is expected to slide after the sales tax is raised to 8 percent from 5 percent on April 1.

Tepid export growth has been a concern for policymakers, who are counting on stronger shipments to help cushion any slide in domestic consumption after the sales tax rise.

Some market watchers, however, including a central bank board member, doubt there will be an early recovery in exports.

BOJ board member Takahide Kiuchi warned that exports could continue to disappoint and that consumer spending could weaken, but said he did not think additional policy easing would help the economy in the long-term.

Exports rose 9.8 percent in February from a year earlier, following a 9.5 percent gain in the previous month, as shipments of cars to China and Asia recovered from a Lunar New Year slowdown, Ministry of Finance (MOF) data showed.

via Reuters

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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