Japan’s finance ministry to release trade data
The Japanese Ministry of Finance is set to release trade data on April 17.
Consistent cost-push pressures surpassing the 2% target by the Bank of Japan (BOJ) are exacerbating cost-of-living problems in Japan. Despite these pressures and a historically low Yen, the data will suggest Japan’s export market displaying continued growth alongside declining imports.
The BOJ recently shifted its monetary policy away from negative interest rates, the first of its kind in 17 years. The ‘shrinkanomics’ approach Japan has taken in the past was an attempt to mitigate its shrinking labor supply and aging population. Growing concerns over inflation and decelerated wage increases have now caused a conservative approach to managing inflation by the central bank.
Expect the Yen to continue to depreciate in the short term, as the BOJ wrestles with continued inflationary targets that are seemingly unwavering. If external demand for Japanese production continues to grow, these figures may be able to offset declines in domestic consumption and encourage the BOJ to hold lowered interest rates until core consumer prices index (CPI) inflation drops below the 2% target. In the medium to long term, the BOJ may shift its policy towards heightened interest rates that aim to affect business and household behavior, preparing the economy for growth after nearly two decades of shrinkage.
