According to the analysts of Credit Suisse, Japan’s economic growth may slow down in the first quarter of this year. After a run of smooth sailing, Japan faces choppier economic waters, including a stronger currency and the risk of a global trade war. Japan’s economy grew a better than expected 1.6 percent in the fourth quarter, but is now likely entering a soft patch, economists say, with a chance that the longest run of expansion in nearly three decades could end in the first quarter. This would hurt the Bank of Japan, which has been making some progress toward 2 percent inflation. The Japanese economy has grown for eight straight quarters as global demand for exports fueled record corporate profits and rising business investment. Industrial production contracted 6.6 percent in January from a month earlier. Production is forecast to have rebounded sharply in February before falling again in March. Retail sales also fell 1.8 percent in January from a month earlier, as Japan suffered through a particularly cold start to the year. In addition, a build-up in inventories during the fourth quarter, one reason for a bigger-than-expected revision to growth, could reverse to weigh on first-quarter results. More than a slowdown in trade, an appreciation of the yen is the “real risk” to economic growth that would weigh on corporate profits and wages. The yen has strengthened more than 6 percent against the U.S. dollar since the start of the year. Corporate profit growth had already been slowing, rising only 0.9 percent in the fourth quarter, the lowest rate since the second quarter of 2016.

Source: BloombergTV.mn