Bank of Japan cuts inflation, economic growth forecasts

Japanese inflation currently stands below one percent, less than halfway to target, despite six years of aggressive monetary stimulus. (AFP)
Updated 25 April 2019

Bank of Japan cuts inflation, economic growth forecasts

  • The Bank of Japan revised down its inflation forecast for the year to March 2021 to 1.3 percent from 1.4 percent
  • Japanese inflation currently stands below one percent, less than halfway to target

TOKYO: Japan will fail to reach its two-percent inflation target even by 2022, the central bank predicted on Thursday as it also revised down its estimate for growth in the world’s third-largest economy.
In its closely watched quarterly report, the Bank of Japan forecast inflation of 1.6 percent in the fiscal year ending March 2022, meaning its years-long battle to reignite prices is far from won.
The BoJ revised down its inflation forecast for the year to March 2021 to 1.3 percent from 1.4 percent.
Japanese inflation currently stands below one percent, less than halfway to target, despite six years of aggressive monetary stimulus under BoJ Governor Haruhiko Kuroda.
The central bank kept its ultra-loose monetary policy in place after a two-day policy board meeting but added a fresh timeframe, saying the “extremely low” rates would be maintained “at least through around spring 2020.”
It cited global economic uncertainties and the risks of a scheduled hike in consumption tax later this year from eight percent to 10 percent.
Economic growth would also come in at 0.8 percent this fiscal year, climbing to 0.9 percent the year after — both downward revisions of 0.1 percentage points.
It forecast GDP at 1.2 percent in the fiscal year ending in 2022.
Kuroda has come under fire over the effectiveness of his monetary easing program and how he intends to return the bank’s policy to normal.
In 2013, the BoJ embarked on a huge bond-buying program in a bid to stimulate long-dormant prices with the stated aim of hitting the two percent mark within two years.
But while the plan — which ran in tandem with Prime Minister Shinzo Abe’s big-spending drive to ramp up the economy — showed early promise, the bank has been forced to delay several times the date for hitting its target.
In January, Kuroda was forced to revise down the BoJ’s inflation forecasts, a step seen as further evidence that authorities are unable to boost prices.
Other central banks have been gradually taking more guarded views on the global economy, with minutes of the US Federal Reserve’s policy meeting last month showing board members split between optimism and caution.
Kuroda is due to speak later Thursday.

South Korea-Japan trade feud engulfs tech giant Samsung

Updated 19 July 2019

South Korea-Japan trade feud engulfs tech giant Samsung

  • Company begins testing non-Japanese material for semiconductors as dispute deepens

SEOUL: Samsung has started testing non-Japanese materials used in producing state-of-the-art semiconductors amid a deepening trade dispute between Seoul and Tokyo.

According to company sources, the South Korean chipmaker has begun testing hydrogen fluoride etching gas from China, Taiwan and some local suppliers.

The etching gas — one of three materials that Japan has decided to restrict shipping to South Korea — is crucial for producing semiconductors since it is used in removing excess material around circuit patterns on silicon wafers.

“We’re testing hydrogen fluoride etching gas from companies outside Japan, such as Taiwan and China, in an effort to diversify supply sources,” a Samsung official told Arab News, asking not to be identified. “We’re also searching for local suppliers of the chemical.”

Testing from new suppliers, however, is to expect to take at least six months, and it remains to be seen if the quality of non-Japanese etching gas will be high enough to be used in the production of semiconductor, the official said, refusing to elaborate new supply sources.

SK Hynix and LG Display have also started testing of non-Japanese high-purity hydrogen fluoride to minimize the impact of Japan’s trade embargo, according to the company officials.

Binhua Group of China is known to be one of the Korean firms’ new suppliers for the etching gas. According to Shanghai Securities News, the chemical company based in Shandong has signed an agreement with South Korean chipmakers to supply etching gas.  

The gas needs to be 99.999 percent pure for it to be used in chipmaking. Companies in Japan maintain top technology levels in the field, taking up to 90 percent of the global market.


Samsung is the world’s largest chipmaker.

On July 1, Japan announced it would curb shipments to South Korea of three materials used for chip and display production — fluorinated polyimide, photoresists and hydrogen fluoride. The move is widely seen as punitive action for a recent court ruling here that orders two Japanese firms to compensate wartime forced laborers. 

With the Moon Jae-in administration rejecting Tokyo’s demand for third-party arbitration, Japan is expected to take the dispute to the International Court of Justice.

Japanese companies can still export high-tech materials to South Korea, but they are required to get a license from the government. The license could take 90 days to come through even if they are approved.

Samsung Electronics and SK Hynix, the world’s two biggest memory chipmakers, have been hit hardest by the tougher export controls by the Japanese government, as both semiconductor manufacturers rely on Japanese supplies for the materials.

According to the Korea International Trade Association, South Korea imported about 92 percent of photoresists and 43.9 percent of hydrogen fluoride from Japan.

Analysts believe the Japanese trade restrictions will compromise Samsung’s next-generation semi-conductor businesses, such as those based on 7-nanometer chip fabrication. The 7-nano chips are made with technology involving extreme ultraviolet lithography, which requires the use of photoresists.

“Samsung was scheduled to mass-produce 7-nano-chips from the latter half of this year with the supply of photoresists from Japan’s supplier, JSR,” said Lee Mi-hye, a researcher at the Export-Import Bank of Korea.

“JSR-made photoresists are produced in Belgium, so it’s not subject to the restrictions for now. But the foreign branches of Japanese firms would be vulnerable to regulations in the near future.”