- Kiichi Murashima, chief economist at Citigroup Inc.
The world's third largest economy feels more and more pressure from the looming tax hike that will be made on April 1. Another evidence the economy can be dragged into recession unless the central bank will pull the trigger once again and introduce a fresh round of the quantitative easing.
Japan is highly dependent on the manufacturing and industrial sector as Japan is known as an export-oriented economy. This week's report is a preliminary data, while the revised figure will be unveiled only 15 days later, therefore, the prelim data has the most impact on financial markets. The USD/JPY currency pair climbed above 103 level for the first time since March 12, as the Ministry of Economy, Trade, and Industry posted disappointing industrial production figures. The nation's industrial activity sank 2.3% on a monthly basis in February, following a 3.8% surge a month earlier, and missing analysts' expectations for a 0.3% pickup. On a yearly basis, however, the output advanced 6.9%.
The so-called Abenomics consist of unprecedented fiscal stimulus, rapid monetary easing, as well as a set of structural reforms, which are all aimed at ending some 15-years of deflation. Due to Abe's efforts, growth has picked up around 1% last year; however, the economy is not ready yet to withstand a knock to demand from the consumption tax hike.
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