Japan Expected to Grow Modestly in 2015

The still-faltering economy, hit hard by April’s consumption tax hike as well as bad weather last summer, is forecast to grow only modestly in fiscal 2015 despite the Abe administration’s latest economic stimulus package.

“I would expect positive growth (for the fiscal year starting in April), but I don’t think it will reach 2 percent,” said Yasunari Ueno, chief market economist at Mizuho Securities Co.

Many economists such as Ueno see Japan’s real gross domestic product shrinking by about 0.5 percent in fiscal 2014, which will end this March 31, before growing between 1.5 percent and 2 percent in the following fiscal year.

That forecast assumes the current recession won’t last long. But it also suggests economists aren’t entirely confident that “Abenomics” — one of the major factors behind the landslide victory of Prime Minister Shinzo Abe’s Liberal Democratic Party in the snap Lower House election on Dec. 14 — will be able to resuscitate the troubled economy.

Following the 3 percentage point hike in the consumption tax to 8 percent on April 1, the economy shrank by an annualized rate of 7.1 percent in real terms in the April-June period. This was broadly in line with many economists’ forecasts.

Revised GDP data for the following quarter turned out to be minus 1.9 percent, falling short of the negative 0.5 percent forecast by economists.

via Japan Times

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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