Economic growth in Japan expected to slow to 1.2%

The slump in Japan’s economy is not all bad news for SA importers and exporters. Certain of our major export products will be exempt from much of Japan’s slowdown in imports, and some of our importers can look forward to a bit of regional price-cutting on the horizon. Not that Japan’s oriental inscrutability is saving them from a few economically tearful faces at the moment, according to credit management bureau, Coface SA. Coface expects economic growth in Japan to slow down to 1.2% – due to the weakening of exports and productive investment. This, they told FTW, is further exacerbated by the yen appreciation, in conjunction with the pronounced economic slowdown in the US and Europe which respectively account for 25% and 15% of Japan’s export market. Also the bureau’s study revealed that inflation was mainly due to the high costs and prices of imported goods, rather than domestic demand – and the spectre of deflationary risk continues to loom over the Japanese economy. “The fiscal deficit and the public debt remain at record levels, with revenues at a virtual standstill amid the economic slowdown,” the report added. While larger Japanese companies enjoy good financial health in general, the economic slowdown and high raw material prices are undermining their profit growth. This profitability slumped 17.5% in the first term of 2008, especially in competitive sectors such as the automotive industry and electrical equipment. However, passenger car production is expected to remain strong, and exports (which account for 54% of local production) to suffer only marginally.