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Outlook Sentiment In Japan Rises Sharply

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Outlook Sentiment In Japan Rises Sharply

Japan’s Cabinet Office earlier today released the April version of it’s Eco Watchers Survey, this key statistic measures short term sentiment in the world’s third largest economy. The Current version of the figure has dropped significantly from 57.9 in March to 41.6 in April, a fall to 45.2 had been expected. The Outlook version of the measure however has picked up measurably, rising from 34.7 in March to the 50.3 reading today.

Earlier in the night Japan reported on it’s Trade Balance figures for the month of March. On a Balance of Payments basis the trade deficit increased from a ¥554.3Bn gap in February to a ¥1,133.6Bn shortfall in March. This no doubt impacted on the March Current Account figures, which fell from ¥612.7Bn to a surplus of just ¥116.4Bn.

This record fall in Japanese trade figures represents the largest in percentage terms since 1985. Two factors are conspiring to weigh on the country’s balance of trade.

Firstly the Island nation of Japan is a major importer of energy and these costs have risen sharply, this is particularly the case since the Fukishima nuclear station went offline and Japan was forced to increase it’s reliance on imported fossil fuels.

Secondly, the weakness in the Japanese Yen has an impact on the balance of payments calculations as the cash received in Yen terms for the same quantity of exports falls away. In time however cheaper exports should lead to a pick up in international demand for Japanese products and services. The Yen weakness is also placing an inflationary pressure on imports, that is they cost more for the same quantity. Long term the weaker Yen will provide a boost to Japanese growth prospects, but on a short-term balance of payments basis these figures will add further pressure to the Japanese financial authorities.

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