Japanese economic growth likely to average 1.4 pct this year - Scotiabank

The Japanese economic growth is well balanced, encompassing the external sector and domestic demand, noted Scotiabank in a research report. Increased corporate profits are strengthening fixed investment, while improving labor market conditions are underpinning household spending. A rise in global demand has translated to stronger activity in Japan’s manufacturing and industrial sectors. Japan’s export volumes growth averaged more than 5 percent on a year-on-year basis last year, driven by strong demand from Asia for Japan’s IT-related goods.

“We expect Japan’s real GDP expansion to average 1.4 percent y/y in 2018 following an estimated 1.8 percent gain in 2017”, stated Scotiabank.

While productivity improvements and increased labor force participation have risen Japan’s potential growth rate a bit to 0.5 percent – 1 percent, the economy is expected to outperform its trend rate and keep the positive output gap that emerged in 2017. Next year, output growth is expected to slow down to a more sustainable level of about 1 percent year-on-year reflecting cyclical factors and the scheduled consumption tax rate rise in October 2019, said Scotiabank.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Japanese Yen was neutral 37.9017, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -57.6449. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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