The Japanese economy is stronger due to improved global growth

The Japanese economy is gaining mainly due to improved global growth. Last year the ¥ was weaker which gave a boost to Japanese exports particularly to the USA. The value of the Japanese ¥ has continued to decline against the US$ throughout Q1.

The outlook for Japan tends to follow the world economy and while it is relatively stable, Japan is influenced by the power of the American consumer and any future protectionist trade policies.

Industrial production and exports have been improving along with a modest increase in consumer activity, but wage growth remains less than 1%. The Bank of Japan (BoJ) has reduced its easing measures which has not caused the ¥ to strengthen partly due to the expectations of further US interest rate rises.

As of 1st June the Nikkei 225 was standing at 19860, up 17.4% over the last 12 months. This growth has been driven primarily by the weakness in the ¥. We may see the ¥ correct upwards later this year as it has started to do recently which will have an impact on the export competitiveness of the Nikkei 225

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