JPY: Financial market turmoil likely to lead to weak economy – Nomura

By FXStreet Research Team at Nomura, suggests that since the beginning of 2016, market participants have been aware of a number of factors that could damage global economic growth and expects weak growth of the Japanese economy in 2016 H1.

Key Quotes

“Improvement in employment conditions and waning of inflationary concerns likely to boost consumer spending: However, while Japan is facing instability in external demand, we think domestic demand will be firm. Labor market supply-demand is tight, as is evident from the low unemployment rate. While per capita wage growth is weak, we expect employee numbers to rise strongly in view of companies’ continued perception of a shortage of labor and think that total household sector income will continue to grow.

We expect lower inflation to boost real incomes and think that consumer sentiment will improve too if food price inflation, in particular, eases. We also think that household consumption is likely to increase as part of the surge in demand ahead of the consumption tax hike scheduled for April 2017.

No signs of acceleration in capex growth, but capex still firm: Because corporate capex has already been growing for some time, we think it is unlikely to show signs of accelerating. Nevertheless, judging from …read more

Source:: FX Street