Japan government upgrades economic view on rising consumer spending

The Japanese government raised its assessment of consumer spending for the first time in seven months after retail sales, household spending, and new car sales gained momentum toward the end of last year. (Reuters)
Updated 19 January 2018
0

Japan government upgrades economic view on rising consumer spending

TOKYO: The Japanese government raised its assessment of the economy in January for the first time in seven months due to rising consumer spending, an encouraging sign that inflation could start to pick up this year.
“Japan’s economy is gradually recovering,” the Cabinet Office said in its monthly economic report on Friday. That marked an upgrade from December, when the Cabinet Office said the economy is on a recovery path.
The government also raised its assessment of consumer spending for the first time in seven months after retail sales, household spending, and new car sales gained momentum toward the end of last year.
Consumer spending is “recovering,” which is an upgrade from the phrase “gradual recovery” used in last month’s report.
The assessment increases the chance that the government will declare an end to deflation, which would amount to a declaration of victory for Prime Minister Shinzo Abe’s ambitious campaign to reflate the economy.
Data for November and December showed consumer spending bounced back from a brief lull caused by bad weather, a Cabinet Office official told reporters.
Improving consumer sentiment, and rising restaurant sales, are also reasons to be optimistic about consumption, the official said.
However, the Cabinet Office left unchanged its assessment that consumer prices are flat, showing it may still take some time for improvements in the economy to feed through to consumer prices.
The Cabinet Office also stuck with its view that industrial output and capital expenditure are gradually expanding.
Abe took office in late 2012 with a bold plan to shake off 15 years of deflation and sub-par growth.
Gross domestic product has expanded for the past seven quarters, the strongest run of growth in a decade. The output gap shows demand exceeds supply by the most in more than nine years. Stock prices are their highest in 26 years, and corporate profits are near an all-time high.
Business investment is rising, exports are growing, and the labor market is the tightest in decades, due partly to a shrinking population.
Japan’s economy minister has hinted that it is possible to declare an end to deflation before consumer prices reach the Bank of Japan’s 2 percent inflation target.
In November, the core consumer price index, which includes oil products but excludes fresh food, rose 0.9 percent year-on-year. This is an improvement over 2016, when prices fell, but still not close to the BOJ’s price target.


French state-owned bank drops plan to aid trade with Iran

Updated 24 September 2018
0

French state-owned bank drops plan to aid trade with Iran

PARIS: French state-owned bank Bpifrance has abandoned its plan to set up a mechanism to aid French companies trading with Iran, in the face of US sanctions against Tehran.
Earlier this year, the bank had said it was working on a project to finance French companies that wished to export goods to Iran despite US sanctions.
“It’s put on hold,” said Nicolas Dufourcq, Bpifrance’s chief executive. “Conditions are not met (...) Sanctions are punitive for companies.”
Bpifrance was working on establishing euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, Bpifrance thought it was possible to avoid the extraterritorial reach of US legislation.
Dufourcq’s latest comments show how the scope of the sanctions is making trade with Iran increasingly difficult for European companies.
The United States is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.
Even though several European countries have said they are seeking to protect their companies from the sanctions, several major companies including oil company Total, Air France-KLM and British Airways have announced they would suspend activities in Iran.
German officials have in recent weeks advocated for the creation of an independent system for cross-border payments to make trade with Iran possible even with the US sanctions.
European Union diplomats have said US President Donald Trump’s positions on trade and on Iran were fueling a rethink about the EU’s dependency on the US financial system.
However, European countries appear to be struggling to find or agree on effective options to tackle the issue.