The Japanese yen is gaining against the greenback after a survey of economists found that they expect the national economy to recover in the fourth quarter. Tokyo experienced a disappointing third quarter, stemming from natural disasters that impacted the overall economy, from consumer spending to industrial output. But with a trade war looming, can Tokyo really spark a rally in the October-to-December period?
On Wednesday, it was reported that Japanâs gross domestic product (GDP) tumbled 0.3% in the third quarter of 2018, which is more than the market forecast of a 0.1% dip. The economic contraction occurred because consumer spending slipped 0.1%, exports fell 1.8%, capital spending dropped 0.2%, and prices for basic foods soared.
But this may be a blip in the radar as a Nikkei survey of 16 private economists projects that the economy may moderate at the end of the year. The real GDP is expected to come in at an average annualized rate of 2.1%.
Will this growth come from federal government spending? Prime Minister Shinzo Abe is demanding a new public works spending program to stimulate the economy.
Speaking during a presentation made at the Council on Economic and Fiscal Policy (CEFP), Economy Minister Toshimitsu Motegi suggested that Abe wants to concentrate strengthening infrastructure as a way to endure natural disasters, like earthquakes and flooding.
The prime minister asked me to take firm measures to ensure that our economic recovery continues. He also said the public works spending program expected at the end of this year should be compiled with this point in mind.
Meanwhile, in order to offset the potential impact from a trade dispute with the US, lawmakers in Japan and Europe are trying to ratify a new economic partnership agreement. The deal passed, but now it waits for ratification among Japanese and European Union (EU) officials.
The USD/JPY currency pair decreased 0.19% to 113.40, from an opening of 113.62, at 17:20 GMT on Thursday. The EUR/JPY edged down 0.08% to 128.39, from an opening of 128.51.
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