the Economic Research Dept.()
研究領域:
研究・専門分野
1997年01月01日
関連カテゴリ
Japan's economy experienced two consecutive years of standstill in fiscal years 1995 and 1996.Although the economy is presently recovering, the consumption tax hike slated for the first half of FY1997 threatens to extend the slump into 1997. However, the economy will avoid a downward spiral and pick up again in the second half of FY1997 because the brunt of adjustments in capital investment have been completed, and the strong yen has halted the decline in external demand.The main issue confronting the economy is its revitalization through adjustments in the industrial structure, financial reorganization, and administrative reform. Macroeconomic policies should move away from implementing additional public investments and focus instead on tax cuts and continued monetary easing.
The U.K. is ahead in the interest rate cycle. Preventive monetary tightening kept the economy sluggish in 1995, and despite interest rate cuts at year-end, under monetary easing, housing market and income growth, consumer spending accelerated, reached 3.0% annual rate by the third quarter. The acceleration will continue as capital investment also increases. The economy's growth rate will rise from 2.25 in 1996 to 3.3% in 1997. Inflation will exceed the government's target. A base rate hike from 5.75% to 6% was implemented in late October, and if the Labor Party wins the general election likely to take place next spring, it will further hike rates to signal its anti-inflationary stance.
Positive factors:
1. Recovery in private demand: In the corporate sector, the revival of capital investment is growing is growing in scope, and profits are trending upward; in the household sector, the employment and income environment continues to improve moderately.
2. Improvement in external demand: On a fiscal year basis, external demand stopped declining and made its first positive contribution to economic growth in five years.
Negative factors:
1. Fiscal tightening: The consumption tax hike, abolition of the special income tax cut, and reduced public works investment will dampen consumption, housing and some area of capital investment after the last-minute surge in demand ends.
2. Persistent structural problems: adjustments in the industrial structure, corporate restructuring, disposal of massive bad debts, ets.
Our forecast is based on the following assumptions: (1) a 1 trillion yen supplemental public works budget (GDP basis, almost all to be implemented in FY 1997), and zero real growth in the initial FY 1997 budget; (2) a consumption tax hike the present 3% to 5% in April; (3) abolition of the special income tax cut (2 trillion yen), (4) an official discount rate hike from the present 0.5% to 1% in January-March 1998, and (5) yen/dollar; exchange rate of 105. yen In addition, we assume that the tax increases will have the following effects: (1) The consumption tax hike will spur a last-minute demand surge, adding 0.3% to GDP growth in FY 1996 and causing an equivalent reactionary fall in FY 1997. There will be a deflationary effect of -0.5% from the consumption tax hike and -0.2% from the abolition of the special income tax cut. (2) The tax increases will have a -1.3% impact on economic growth in FY 1997.
Table 1 Real GDP Growth Rate
(% change yoy; FY for Japan; 1995 is estimated for East Asia)
Table 2 Consumer Price Inflation Rate
(% change yoy; FY for Japan)
Table 3 Currant Account Balance
(half-year figures are saar; parentheses denote ratio to nominal GDP in %; FY for Japan)
Table 4 Interest Rates
(%; P=peak, B=bottom)
研究領域:
研究・専門分野