JAPAN

摘要

Japanese Prime Minister Shinzo Abe is planning to curb increases in government expenditure in forthcoming years in a bid to tackle the country's long-term debt problem. In draft proposals released last month, the government stated that spending should rise by no more than ¥1.6tn over the next three fiscal years and that, excluding interest payments, the budget deficit should be cut to 1% of GDP by FY 18/19. Latest data show an altogether improving outlook for the economy on the back of stronger-than-expected growth during Q1. Despite sluggish export growth of just 2.4% (y-o-y) in May, unemployment remained steady at a seasonally-adjusted 18-year low of 3.3%. Meanwhile, the services PMI edged up to 51.8 in June, its highest level in nine months, indicating solid domestic activity. Elsewhere, household expenditure rose by 4.8% (y-o-y) in May, and Tankan surveys also indicate that business sentiment is recovering, with the June survey revealing a 3-point rise in the index in sentiment amongst large manufacturing firms compared with the previous quarter. Our panel is forecasting modest growth of 1.0% this year, rising to 1.7% in 2016.