Findlay Nicolson: Trade War Could Derail Japan’s Economic Recovery

Taipei, Taiwan, July 19, 2019 --(PR.com)-- Findlay Nicolson analysts say that although Japan’s economy is expected to continue expanding moderately, it is feeling the strain from ongoing tensions between the US and China. Earlier this week, the Bank of Japan (BoJ) reduced its assessment of factory activity in two of the country’s regions, indicating that more companies are feeling the impact of the trade war than three months ago.

Findlay Nicolson analysts say that for the time being, Japan’s robust domestic demand has been able to offset a degree of the weakness seen in exports as a result of the trade war but a recent report by the BoJ revealed that a growing number of businesses are feeling greater concern over the outcome of the trade war and the current global economic slowdown.

The BoJ has promised to maintain monetary stimulus for as long as is needed to help the economy reach its targeted rate of 2% inflation, even pledging to increase stimulus if need be.

But Findlay Nicolson analysts say that growth will likely slow in the coming months as exports will be further weakened by unresolved US-China trade tensions, Japan may not have the necessary resources to provide stimulus required to boost the economy.

Years of easing have reduced interest rates to zero. Commercial financial institutions have minimal profit margins and Findlay Nicolson analysts say the central bank is lacking sufficient room to maneuver should the Japanese economy fall into another recession.