Tokyo — Japan’s household spending increased in January, but the business mood subsided in the first quarter as rising raw material costs squeezed corporate profits and the country’s resource-poor economy faced a difficult situation. did.
As a result, policymakers are likely to stagnate this quarter and step up fiscal stimulus to support the Japanese economy facing new risks from rising fuel prices due to the Ukraine crisis. I’m putting pressure on you.
“Although the number of infections is gradually declining, service consumption has not completely resumed, which increases the likelihood that the Japanese economy will shrink from January to March,” said Norinchukin Research. Takeshi Minami, the chief economist of the company, said.
“Households may keep their purse strings tight given the rising energy costs and rising prices of daily necessities.”
Household spending in January increased 6.9% year-on-year, government data showed on Friday. This is above the median market forecast of 3.6%. It fell 0.2% in December.
This increase was primarily due to the fundamental impact of the slump in January last year when the COVID-19 state of emergency was imposed.
In some parts of Japan, loose curbs remain to cope with the proliferation of new cases of Coronavirus Omicron virus, placing emphasis on household spending.
According to another government survey, Japanese corporate sentiment subsided in the first quarter, hitting sectors vulnerable to rising raw material costs such as food and transportation.
According to the survey, the index that measures the sentiment of large companies was -7.5% this quarter, but +9.6 during the period from October to December. This was the first negative reading in three quarters.
Data show that the mood of small businesses also deteriorated in the first quarter.
Japan’s heavy reliance on fuel and commodity imports makes its economy vulnerable to the accelerated rise in raw material costs following Russia’s invasion of Ukraine in late February.
Wholesale inflation reached a record 9.3% in February, and analysts expect core consumer inflation to approach the Bank of Japan’s 2% target from April, already weakening consumer spending and corporate spending. There is a risk of choking.
Some lawmakers have begun demanding another spending package to mitigate the impact of rising energy costs, and one opposition executive has proposed a package of around $ 10 trillion ($ 86 billion).
Finance Minister Shunichi Suzuki said Friday that the government is not considering creating new stimulus measures as it focuses on passing the 2022 budget to Congress.
Japan’s economic growth may have almost stopped or shrunk from January to March, according to a Reuters study, as COVID-19 restraints and supply chain disruptions are negatively impacting consumption and factory production. There is sex.
($ 1 = 116.2600 yen)
Kentaro Komiya, Reika Kihara