Image Credits : KTAR
Japan in its latest economic assessment for September 2024, remains confident about the country’s growth trajectory, bolstered by strong corporate earnings and steady domestic demand. The government has retained its positive economic stance, highlighting the resilience of the corporate sector amidst global economic headwinds, including inflation and a potential slowdown in exports.
The Japanese Cabinet Office’s mid-year economic projection, released in August, indicated that the country’s recovery is set to continue moderately, driven by corporate investment and increased household spending. Wages have seen incremental growth, and this rise in disposable income has contributed to stronger domestic demand, further supported by the government’s fiscal policies that aim to stimulate growth in emerging sectors, such as green energy and digitalisation.
Corporate earnings have remained robust, largely thanks to capital expenditure projects, particularly in the high-tech and sustainable energy sectors. The corporate sector’s strong performance has also been buoyed by favourable exchange rates and sustained global demand for Japanese technology, despite a slowdown in exports to key markets like China. The government’s policies have encouraged businesses to invest more heavily in infrastructure and technological innovation, setting the stage for long-term growth.
In terms of monetary policy, the Bank of Japan continues to adopt a cautiously accommodative stance, maintaining ultra-low interest rates while preparing for a gradual tightening cycle in 2024. Although inflation has remained a concern, the corporate sector’s strength has helped offset price pressures, allowing businesses to maintain profitability. As the central bank begins to shift its focus towards normalising its policy, many analysts expect moderate interest rate hikes next year, a move that could further support the economy without stifling growth.