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Coronavirus seen shaving 0.2 percentage points off Japan’s 2020 GDP growth: Reuters poll

Coronavirus seen shaving 0.2 percentage points off Japan’s 2020 GDP growth: Reuters poll

The coronavirus epidemic is expected
to shave up to 0.2 percentage points off Japan’s economic growth this year as
it hits exports, factory output and tourism, a Reuters poll of analysts showed
on Friday.

The virus outbreak, which originated
in China, has killed more than 1,300 people, and caused huge disruptions in
movements of goods and people.

“If global supply chain disruptions
and travel restrictions are prolonged, the impact will become bigger. But if
things stabilize in about two months, the damage will be limited,” said Mari
Iwashita, chief market economist at Daiwa Securities.

“We expect exports and factory
output to stagnate in the current quarter, before picking up in April-June,”
she said.

Asked how much the virus outbreak
could cut Japan’s economy this calendar year, 17 of 32 analysts said 0.1-0.2
percentage points and seven said less than 0.1 percentage point, the Feb. 4-13
poll showed.

The economy is expected to grow
0.16% in 2020, an ESP survey conducted each month by a nonprofit private
research institute, showed on Thursday.

For the current fiscal year ending
in March, analysts polled by Reuters expect Japan’s gross domestic product
(GDP) to expand 0.8% with last year’s sales tax hike seen triggering a
contraction in growth in October-December.

Growth is likely to slow to 0.5% in
the fiscal year beginning in April, the poll showed.

Japan’s heavy reliance on China
makes its economy vulnerable to the fallout from the virus. China is Japan’s
second largest export destination and the Chinese made up 30% of all tourists
visiting Japan and nearly 40% of the foreign tourist spending last year, an
industry survey showed.

BOJ OUTLOOK

The survey found 28 of 40
economists, or 70%, predict the BOJ’s next policy move would be to whittle down
its massive stimulus program, largely unchanged from the previous month’s
survey.

A majority of economists also
expected any such move to happen sometime in 2022 or later, the poll showed.
Those who expect the central bank’s next move to be an additional easing stood
at 30%.

“Downside pressure to the economy
from the coronavirus is unavoidable in the short term,” said Takumi Tsunoda,
senior economist at Shinkin Central Bank Research Institute.

“Financial markets, including
currency markets, are stable. We believe the chance of additional BOJ easing is
low.”

Economists are split on whether the
BOJ will conduct a review of its policy target and tools as its European and
U.S. counterparts are doing amid subdued growth and inflation.

The poll showed 20 of 39 economists
don’t expect the BOJ to review its policy, while 19 said the central bank will.
Among those who selected “yes”, more than half predicted it could be by the
first half of 2021 and 42% said it would be sometime in 2020 or later.

“While the probability of another
round of comprehensive review is not so high, the results of reviews by both
major central banks would have non-negligible impacts on the BOJ’s strategy in
coming years,” said Tetsuya Inoue, chief researcher at Nomura Research
Institute.

Core consumer inflation, which
excludes volatile fresh food costs, is expected to be 0.6% in the current
fiscal year and be at 0.5% the following year, the poll found, far below the
BOJ’s 2% inflation target.

Source: Reuters 

Posted on : 14 February 2020
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