Monthly Report of Prospects for Japan`s Economy April 2006

Monthly Report of Prospects for Japan's Economy
April ２００６
Macro Economic Research Centre
Economics Department
The Japan Research Institute, Limited
http://www.jri.co.jp/thinktank/research/
This report is the English version of the March 2006 issue of the original Japanese version.
Current situation of Japan’s economy – Stepping up the pace of recovery
Japan’s economy as a whole is stepping up the pace of recovery. The Industrial Production Index, which indicates the direction and the level
of economic activities, rose in January for the sixth month running and has continued to set monthly records since November 2005. The uptrend
of the economy is mainly due to the following favourable cycle: "a buoyancy in exports, an expansion of business fixed investment" → "a firm rise
in corporate profits" → "a mild recovery in workers' total cash earnings, an uptrend of stock prices" → "an increase in household consumption " →
"a further rise in corporate profits". This cycle is bolstered by the circumstances of dissipating adjustment pressure. Although the negative
influences such as a lag in inventory adjustment in some material sectors and the weighing impact of higher oil prices can be seen, these could
be absorbed in the positive effects produced by the cycle.
Fig. 1 Main Indicators for Japan's Economy
(CY2000=100, s.a.)
115
(CY2000=100,s.a.,3-m.m.a.)
Industrial Inventory Ratio Index
116
110
Retail Sales Index (Real)
112
105
Household Consumption
Expenditure Index (Real)
108
100
104
95
100
90
96
Industrial Production Index
85
1996
97
98
99
(CY2000=100,s.a.,3-m.m.a.)
130
2000
01
92
02
03
04
05
06
(Y/M)
1996
Index for Machinery Orders (Real, Private,
excl. Electric Power and Shipbuilding)
97
98
99
2000
01
02
110
100
100
90
90
80
80
Index for Building Construction Starts (Floor Area, Private, Non-dwelling)
98
99
2000
01
02
03
04
05
06
(Y/M)
Real Imports Index
120
97
05
130
110
1996
04
(CY2000=100,s.a.,3-m.m.a.)
120
70
03
06
Real Exports Index
70
1996
(Y/M)
97
98
99
2000
01
02
03
04
05
06
(Y/M)
Source: The Ministry of Economy, Trade and Industry, The Ministry of Internal Affairs and Communications, The Cabinet Office, The Ministry of Land, Infrastructure and Transport, The Bank of Japan
Note 1: Indices of Household Consumption Expenditure, Retail Sales, Machinery Orders, Building Construction Starts, Exports, and Imports are calculated as seasonally adjusted and 3-month moving averages.
Note 2: The Industrial Production Index in February and March 2006 is based on METI forecasts. Note 3: Shaded areas indicate periods of recession according to the Cabinet Office.
- 1 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Business fixed investment – Strong, yet less than in previous phases
Business fixed investment would make its strong expansionary trend more noticeable in a wider rage of industries. On the other hand, in
the longer perspective, it is expected that the pace of expansion would be less vigorous than in the previous expansion phases due to the
changes in corporate behaviour of Japan's enterprises. The first visible change would be that Japan's enterprises have often shifted some of
their funds to share repurchase plans as well as dividends, aiming at lifting their share prices and protecting them from undesirable
takeovers. The second could be said that they have come to take a wider range of options for business expansion into consideration, such
as M&A and direct investment abroad, as well as domestic business fixed investment, aiming at maximising return on their capital.
Fig. 2-1 Domestic Business Fixed Investment, Domestic
M&A and Direct Investment Abroad
Fig. 2-2 Ratio of Operating Profits to Fixed Assets
and Real Business Fixed Investment
140
95
90
100
80
80
75
12
70
8
85
20
60
4
55
0
50
0
1997
98
99
2000
01
02
03
04
05
to Fixed Assets (Right Scale)
16
65
40
Ratio of Operating Profits
20
120
( trillion JY)
60
(％)
(％)
(％)
▲4
45
(CY)
Real Business
▲8
③海外直接投資
(3) Direct Investment Abroad (Left Scale)
Fixed Investment
▲12
(2) Domestic M&A (Left Scale)
②国内Ｍ＆Ａ
(1) Domestic Business Fixed Investment (Left Scale)
①国内設備投資
(y/y % Change
Left Scale)
▲16
Share of (1) [ (1) / (1)+(2)+(3) ]
国内設備ｳｴｲﾄ（①÷(①+②+③)、右）
1995 96
Source: The Japan Research Institute, Ltd. based on the data of The Cabinet Office, RECOF Corporation,
97
98
99 2000 01
02
03
04
7.8
7.6
7.4
7.2
7.0
6.8
6.6
6.4
6.2
6.0
5.8
5.6
5.4
5.2
5.0
4.8
4.6
4.4
4.2
4.0
05 (Y/Q)
Source: The Japan Research Institute, Ltd. based on the data of The Ministry of Finance
The Ministry of Finance, The Bank of Japan
Note: The figure of Domestic M&A is the total of "IN - IN" (Japanese capital acquirer - Japanese capital target)
transactions based on the data of RECOF Corporation and consists of Merger, Acquisition, Business
and the Cabinet Office.
Note: Shaded areas indicate periods of recession according to the Cabinet Office.
transfer, Purchase of minority interest and Additional purchase of minority interest.
Monthly Report of Prospects for Japan's Economy April 2006
- 2 -
The Japan Research Institute, Limited
Wages situation - No especially noticeable buoyancy
It is expected that wages will continue to recover, yet the improvement situation would show no especially visible buoyancy. In the wage
settlements this spring, accordingly, both labour and management predict that there would be a passable weighted average pay increase of
around 1.9 per cent. This exhibits the recent tendency in corporate behaviour. Japan's enterprises have shifted their priorities from salaries and
wages to internal reserves as well as dividends, and are very cautious about raising labour's relative share. It is also a reflection of the fact that
management is very aware of the strengthening power of shareholders and the increasing necessity of the competitiveness of enterprises. In
addition, it shows recent changes in wage negotiation circumstances that both labour and management can not necessarily act in concert inside
each industry, reflecting a widening gap in financial results between enterprises.
Fig. 3-1 Shift in Priorities in Distribution of Value Added
< non-financial enterprises >
< comparison between phases with current profits increases >
Fig. 3-2 Weighted Average Pay Increases in Spring
Wage Settlements and Forecast This Year
(％)
( average yearly increase or decrease, trillion JY )
18
6
16
5.60
4.92
5
14
12
Weighted Average Pay Increase in
Forecast in Spring 2006
the Spring Wage Settlements
(Survey of the Institute of
(Survey of Nippon Keidanren)
Labour Administration)
Labour
4
3.10
10
2.80 2.81 2.84
3
8
6
2
4
：1.9％
Management ：1.9％
3.86
2.62
2.14
4.4
1.97 1.93
1.59 1.65 1.64 1.67
3.1
1
2
0
1.9
2.0
1.3
1.2
0.9
0
▲2
▲4
▲1
87～89
94～97
99～00
02～04
0.1
0.4
▲0.1 ▲0.2
Y/Y % Change in Workers' Cash
Earnings for scheduled working hours
▲1.1
▲2
人件費
Salaries and wages
役員賞与
Bonus for directors
支払利息、賃借料等
Interest & rental expenses
租税公課、法人税･事業税等
Taxes & public charges
配当金
Dividends
社内留保
Internal reserves
付加価値
Value added
1991 92
93
94
95
96
97
98
99 2000 01
▲0.7 ▲0.7
▲1.4
02
03
04
05
06
(FY)
Source: Nippon Keidanren, The Ministry of Health, Labour and Welfare, The Institute of Labour Administration
Note: Workers' cash earnings for scheduled working hours is at establishments with 5 employees or more.
Source: The Ministry of Finance, "Financial Statements Annual Statistics of Corporations by Industry"
- 3 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Exports – Slight slowdown in expansion
Japan's exports are expected to continue to expand, led mainly by those to emerging and/or resource-rich countries. Yet the pace
of the expansion is likely to slow down moderately as the US economy is projected to move into a slightly decelerating phase*, given
the weight of exports to the US, which accounts for around 20 per cent of the total, and the downside influences on the part of exports
to Asian regions.
*The US economy this year is unlikely to decelerate much in its growth rate mainly because an expansionary trend in business fixed investment would be maintained. However,
a slowdown in the housing market would begin slowing household consumption expenditure gradually, which would bring the US economy into a slightly decelerating phase. It is
forecast that the US economy would grow in real terms at 3.5% in CY2005 and 3.3% in CY2006.
Fig. 4-1 Contribution to Year-to-Year Percent Change in Nominal
Exports by Country/Region
<3-Month Moving Average>
7.0
6.5
6.0
( p.a. Trillion
5.5 JY )
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1993
ロシア
(％)
8.0
7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
94
95
96
97
ｵｰｽﾄﾗﾘｱ
Australia
ＵＡＥ
Fig. 4-2 Change in Real GDP of the US and Real Exports of Japan
UAE
Russia
ブラジルBrazil
Source: The Ministry of Finance
98
992000
01
02
03
04
05
06 (Y/Q)
Saudi Arabia
ｻｳｼﾞｱﾗﾋﾞｱ
(％)
(％)
Fixed Investment
24
5.5
5.0
20
4.5
16
4.0
12
3.5
8
3.0
4
2.5
0
2.0
▲4
1.5
▲8
- Minor Adjustment
1.0
in IT Sector
▲ 12
Domestic Demand
crisis
▲ 16
▲ 20
19 95
96
97
98
0.5
- China curbs
Asian Currency
99 20 00
Change in Real Exports of
わが国実質輸出(左)
Other Middle Eastern countries
その他中東諸国(ｲﾗﾝ、ｸｳｪｰﾄ、ｵﾏｰﾝなど)
Our Forecast
Boom in China
Japan (Left Scale)
01
02
03
04
05
0.0
▲ 0.5
06 (Y/M)
Change in Real GDP of
米国実質成長率(右)
the US (Right Scale)
Mexico
メキシコ
Share of major resource rich countries
対｢主要資源国｣輸出の対世界輸出に占めるウエイト(右)
in Japan's exports (right scale)
- 4 -
Source: The US Department of Commerce, The Bank of Japan, The Japan Research Institute, Ltd.
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Structure of the economy - Increasing resilience
As for the prospects, the recovery of Japan’s economy is expected to be more solid, and it is unlikely that the favourable cycle would be
disrupted. The cycle exhibits "an expansion of exports and business fixed investment" → "a rise in corporate profits" → "a recovery in wages as
well as employment, an uptrend of stock prices" → "an increase in private consumption " → "a rise in corporate profits". This is bolstered by the
following three favourable factors: abundant liquidity in the corporate sector, increasing income from direct investment abroad, and visibly
receding deflationary pressure since the end of last year. In addition, as the business attitude of enterprises can be seen as firmly cautious just
after the completion of structural adjustments, the sure and steady stance of enterprises could make the uptrend of the economy longer-lasting.
Fig. 5-2 Income on Direct Investment Abroad
and on Royalties and Licenses
Fig. 5-1 Net Position in Financial Assets and Liabilities
of Nonfinancial Corporations
( trillion JY)
400
( p.a. trillion JY)
900
6.0
5.5
300
800
5.0
Direct Investment Income : Credit Amount
直接投資収益：受取
特許等使用料：受取
Royalties and License Fees : Credit Amount
4.5
200
700
4.0
( trillion JY)
3.5
100
600
0
500
3.0
2.5
2.0
1.5
▲100
1.0
400
0.5
▲200
0.0
300
1998
99
2000
01
02
03
04
1991 92 93 94 95 96 97 98 992000 01 02 03 04 05
05
(Year/at the end of each quarter)
(Y/Q)
ﾈｯﾄﾎﾟｼﾞｼｮﾝ(①-②、左)
Net Position (Left Scale)
Financial Assets (Right Scale)
金融資産(①、右)
Financial Liabilities (excl. Shares and Other Equities, Right Scale)
金融負債(除く株式･出資金、②、右)
Source: The Ministry of Finance
Source: The Bank of Japan
- 5 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Favourable cycle – Bolstered by stock price hikes
As for the favourable cycle, it is noteworthy that the correlation between stock prices and private consumption expenditure has been
strengthened in recent years. The recent recovery of private consumption is contributed to by an increase in net financial assets in
households, reflecting the stock price hikes. Therefore, it is hoped that the recovery of private consumption would outpace that of employment
and wages, if the stock prices follow a steady and solid path, reflecting the firm fundamentals of Japan's economy in due course. It is also
hoped that the negative influence on private consumption of the scheduled increases in the financial burden on households such as a half cut
of the tax credit both in income and local inhabitants taxes would be offset by the positive influence exerted by the uptrend in stock prices.
Nikkei 225 Stock
日経平均株価(左）
Price
Index
((年率、兆円)
p.a. trillion JY)
Nominal
Compensation
名目雇用者報酬
for Employees
(GDP)
(GDP統計、右）
Nominal
House名目家計消費(左）
holds Expenditure
2000
01
02
03
04
05
06
274
270
266
262
258
254
250
246
242
(Y/M)
(年/期)
Source: The Cabinet Office, Nikkei Shimbun
Note 1: Nominal Households Expenditure does not include imputed cost of housing.
2: The Nikkei 225 stock price index in Q1 2006 is an average until February 21.
(％)
[ CY1995
- 2000 ]
【1995～2000年】
2.5
名
目 2.0
家 1.5
計
消 1.0
費 0.5
支
0.0
出
・ ▲ 0.5
前 ▲ 1.0
年
比 ▲ 1.5
( Y/Y % Change in Nominal Households Expenditure)
20000
18000
16000
14000
12000
10000
8000
258
254
250
( p.a.(年率、
trillion JY)
246
兆円)
242
238
234
230
226
( Y/Y % Change in Nominal Households Expenditure)
(JY)
(円)
Fig. 6-2 Nikkei 225 Stock Price Index
and Nominal Households Expenditure
Fig. 6-1 Nikkei 225 Stock Price Index and
Compensation for Employees
▲ 2.5
▲40 ▲30 ▲20 ▲10
0
10
20
30
40
( Y/Y % Change
in the Nikkei 225 Stock Price
日経平均株価・前期末値の前年比
Index at the end of the previous quarter)
50
【2001～2005年】
2.5
名
目 2.0
家 1.5
計
消 1.0
費 0.5
支
0.0
出
・ ▲ 0.5
前 ▲ 1.0
年
比 ▲ 1.5
y = 0.0209x + 0.2226
2
R = 0.1293
▲ 2.0
[ CY2001 - 2005 ]
(％)
60
(％)
y = 0.0375 x + 0.4220
2
R = 0.5030
▲ 2.0
▲ 2.5
▲40 ▲30 ▲20 ▲10 0
10
20
30
40
50
( Y/Y % Change
in the Nikkei 225 Stock Price
日経平均株価・前期末値の前年比
60
(％)
Index at the end of the previous quarter)
Source: The Japan Research Institute, Ltd. based on the data of Nikkei Shimbun and the Cabinet Office.
Note 1: Nominal Households Expenditure does not include imputed cost of housing.
2: The figure in Q1 1997 is excluded, when the consumption tax rise just after caused a last-minute push in households expenditure.
- 6 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Aggregate supply-demand gap - improving steadily
As the recovery of Japan’s economy becomes more solid, the aggregate supply-demand balance is expected to continue to improve
steadily. According to our projection, the annualised percentage change from the previous quarter in the GDP growth rate in real terms
would be around 2 per cent in each quarter during FY 2005, which is above Japan's potential GDP growth rate (estimated around
1.5%). As for the fiscal year, it is projected that Japan’s real GDP would grow by 3.3% in FY2005, which is the highest since FY2000,
and by 2.3% in FY2006, as it would continue to grow at a pace above Japan's potential GDP growth rate.
Fig 7-1 Estimate of Potential GDP Growth Rate of
Japan and Aggregate Demand - Supply Gap
Fig 7-2 Contributions to Potential GDP Growth
Rate of Japan < Estimate >
(％ change against the previous quarter)
10
9
8
7
6
5
4
3
(％)
2
1
0
▲1
▲2
▲3
▲4
▲5
▲6
▲7
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
(Forecast)
1.52
(4Q)
▲1.5
(4Q)
7
6
5
4
3
2
1
0
▲1
▲2
▲3
▲4
▲5
▲6
▲7
▲8
▲9
▲10
05 06 07 (Y/Q)
GDPギャップ(左)
Estimate Aggregate Demand - Supply Gap (Left Scale)
Estimate Potential GDP Growth Rate (Right Scale)
潜在成長率(右)
Actual Real GDP Growth Rate (Right Scale)
実際の実質成長率(右)
(percentage points contribution)
(％)
労働寄与度
Labour
TFP
ＴＦＰ寄与度
Capital
資本寄与度
Potential GDP
潜在成長率
Actual GDP
実際の成長率
5
4
3
2
1
0
▲1
1986～90
91～95
96～00
2001～05
(CY, Average)
Source: The Japan Research Institute, Ltd. based on the data of The Cabinet Office, The Ministry
of Internal Affairs and Communications, The Ministry of Economy, Trade and Industry,
The Ministry of Health, Labour and Welfare, The Bank of Japan.
Source: The Japan Research Institute, Ltd. based on the data of The Cabinet Office, The Ministry of
Internal Affairs and Communications, The Ministry of Economy, Trade and Industry
Note: Estimate Aggregate Demand - Supply Gap = (Actual Real GDP Growth Rate - Estimate Potential
Note: The equation for this analysis is as follows:　lnY＝α*lnLh＋(１-α)*lnKs＋TFP
Y：Real GDP、L：Numbers of Workers、h：Working Hours、K：Stock of Capital、
ｓ：Capacity Utilisation、α：Weights of Labour (0.73)
GDP Growth Rate) / Estimate Potential GDP Growth Rate [our estimate]
- 7 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Consumer Price – Very modest rise in positive territory
The Consumer Price Index (CPI, excluding fresh food) crept into positive territory (0.1%) in November-December 2005. The positive growth
was actually the first in seven years. As for the prospects, the rate of growth in the index should remain positive, although modest, and is highly
unlikely to go back to the negative. This is partly because the pricing power of processing industries has also begun to recover and, at length,
they are able to pass a part of the costs of higher energy prices to their products amid the improved circumstances of demand- supply balances.
However, all things considered, the following trend factors are expected to make a move in CPI more moderate and stable, accordingly, to make
the pace of rise very limited. These factors are: (i) a continued inflow of overseas products with low prices into Japan's markets, and (ii) a
moderate tempo of recovery in wages, which will curb the incentive for raising services prices closely related to wage settlements.
Fig 8-2 Characteristic Pattern of Changes in Corporate Profits, Workers' Cash
Earnings and Consumer Price Index by Economic Recovery Phases
Fig 8-1 Input-Output Price Index of Manufacturing Industries
and Consumer Price Index of Industrial Products
(CY2000=100)
(2000年=100)
145
140
Input-Output
Price Index :
【素材業種(左)】
135
130
Material
Industries
125
120
115
110
105
100
95
90
85
(CY2000=100)
(2000年=100)
Processing
Industries
【加工業種(右)】
124
投入物価
116
Input Price Index
112
120
産出物価
Output
Price Index
108
116
104
(CY2000=100)
(2000年=100)
112
100
108
96
【消費者物価：工業製品(左)】
CPI: Industrial Products
92
104
88
100
84
96
80
92
76
1991 92 93 94 95 96 97 98 992000 01 02 03 04 05 06
(Y/Q)
(年/期)
Source: The Bank of Japan, The Ministry of Internal Affairs and Communications
(Each Recession Trough=100)
(Each Recession Trough=100)
114
240
Corporate
112
220
Profits
Cash
利益(右)
(right
scale)
110
200
Earnings
賃金(左)
【99/1Q～】
(left scale)
108
【02/1Q～】
180
106
160
104
140
物価
CPI
102
120
(左)
(left)
100
【86/4Q～】
100
【93/4Q～】
98
80
0
4
8
12
16
0
4
8
12
0
4
0
4
8
12
16
(after quarters)
Source: The Japan Research Institute, Ltd. based on the data of The Ministry of Finance, The Ministry of Health,
Labour and Welfare, The Ministry of Internal Affairs and Communications
Note1: Corporate Profits: current profits of non-financial enterprises, Workers' Cash Earnings: cash earnings for
scheduled working hours, Consumer Price Index: CPI excluding fresh food
2: All figures are seasonally adjusted by X-11.
Note: The figure in Q1 2006 is that of January 2006.
- 8 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Prospects for Japan's economy - To continue to firm up
(1) Projection for economic growth
It is projected that Japan’s real GDP would grow by 3.3% in FY2005, which is the highest since FY2000, and by 2.3% in FY2006, as it would continue to grow at
a pace above Japan's potential GDP growth rate (estimated around 1.5%).
(2) Main positive developments to be considered
(i) Japan's economy should continue to recover. The uptrend of the economy is mainly due to the following favourable cycle: "a buoyancy in exports, an
expansion of business fixed investment" → "a firm rise in corporate profits" → "a mild recovery in workers' total cash earnings, an uptrend of stock prices" → "an
increase in household consumption " → "a further rise in corporate profits". This cycle would be maintained and make the economic situation firmer.
(ii) It is hoped that the negative influence on private consumption of the scheduled increases in the financial burden on households such as a half cut of the tax
credit would be offset by the positive influence of stock prices, given the firm fundamentals of Japan's economy being reflected in the stock market in due course.
(iii) With the recent corporate behaviour giving priority to making net worth more solid, the pace of recovery in employment and wages would be more moderate
than before. The situation characterises this economic recovery, which seems to exhibit a firmer and longer-lasting uptrend in economic activities.
(iv) The CPI (excluding fresh foods) growth rate would stay positive, and remain very modest, reflecting a mild narrowing of the aggregate supply-demand gap.
(3) Factors which would make the pace of recovery moderate
It should be kept in mind as well that the pace of the economic recovery would be moderate due to these curbing factors, as the business attitude of enterprises
can be seen as firmly cautious and more wide ranging.
(i) Business fixed investment is expected to continue to expand. However, Japan's enterprises have come to take a wider range of options for business
expansion into consideration, such as M&A and direct investment abroad, as well as domestic business fixed investment, aiming at maximising return on capital.
(ii) With enterprises trying to keep labour's relative share at an appropriate level, the pace of improvement in employment and wages would be milder than
before. In view of private consumption, this tendency would make an acceleration in the growth rate of consumption less likely.
(iii) Exports are expected to continue to expand, led mainly by those to emerging and/or resource-rich countries. Yet the pace of the increase would be gradually
slowing down as the US economy is projected to move into a slightly decelerating phase.
(4) Uncertainties expected in the recovery
The risks to the central projection are downside in the following first two, and either side in the latter one. These are (i) the U.S. economy would decelerate in its
growth rate at an unexpected pace, (ii) oil prices would increase further at an unexpectedly rapid tempo, and (iii) stock prices in Japan would go up or down more
than previous expectations.
- 9 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited
Fig. 10 Projections for GDP Growth and Main Indicators of Japan
(seasonally adjusted, annual % changes from the previous quarter)
CY2005
4～6
CY2006
7～9
10～12
( Actual )
1～3
4～6
CY2007
7～9
10～12
( Projection )
1～3
FY2004
FY2005
FY2006
( Projection )
(Actual)
5.7
0.8
5.4
1.6
2.3
2.2
2.0
1.7
1.7
3.3
2.3
3.3
1.7
3.5
1.2
2.3
2.1
2.0
1.3
1.7
2.5
2.0
▲ 7.3
6.6
8.5
▲ 2.8
2.1
2.0
1.2
1.0
1.7
▲ 0.6
2.0
9.5
6.2
1.4
9.6
8.1
6.5
6.2
5.6
5.4
7.3
6.7
1.5)
(▲ 1.8) (
0.7)
0.1) (
0.0)
(▲ 0.3) (
0.2)
Government Consumption Expenditure
1.1
1.6
1.0
1.4
1.4
1.3
1.3
1.3
1.8
1.6
1.4
Public Investment
4.1
1.2 ▲ 10.2
▲ 7.5
▲ 6.6
▲ 6.4
▲ 6.0
▲ 5.8
▲ 12.4
▲ 1.8
▲ 6.6
0.9) (
0.3) (
(▲ 0.0)
(▲ 0.1)
(▲ 0.1) (
0.2)
5.5
5.0
6.4
11.4
8.8
7.5
7.8
7.2
6.8
8.7
6.3
6.8
Real ＧＤＰ
Private Consumption Expenditure
Housing Investment
Business Fixed Investment
Private Inventories (percentage points contribution)
Net Exports (percentage points contribution)
(
(
(▲ 0.3)
2.3) (
0.1)
(▲ 0.1) (
Exports of Goods and Services
14.7
12.8
14.9
7.2
6.2
Imports of Goods and Services
9.0
13.6
▲ 3.4
8.4
8.2
(▲ 0.1)
(
0.5) (
0.5)
(▲ 0.1)
(
0.3)
(% changes from the same quarter of the previous year)
Real ＧＤＰ
Nominal ＧＤＰ
Consumer Price Index (excl. fresh food)
Industrial Production Index
Unemployment Rate
Current Account Balances
Share of Nominal GDP
Exchange Rates
(％)
(trillion JY)
(％)
(JY/US$)
2.6
1.4
▲ 0.1
0.3
2.8
1.5
▲ 0.1
0.1
4.0
2.4
0.1
3.4
3.6
2.5
0.5
3.7
2.5
1.7
0.3
4.4
3.0
2.5
0.3
4.8
1.8
1.9
0.3
3.0
2.2
2.4
0.3
2.5
1.7
0.5
▲ 0.2
4.1
3.3
2.0
0.1
1.9
2.3
2.1
0.3
3.6
4.3
4.09
3.4
107.6
4.3
4.75
3.4
111.2
4.5
4.65
4.1
117.3
4.3
4.19
3.3
117.0
4.0
4.24
3.5
117.0
3.9
4.99
3.4
114.0
3.9
3.94
3.4
112.0
3.8
3.98
3.2
110.0
4.6
18.21
3.7
107.5
4.4
17.68
3.5
113.2
3.9
17.15
3.3
113.3
Source: The Cabinet Office, The Ministry of Internal Affairs and Communications. The projection figures are based on those of The Japan Research Institute, Ltd.
Note: The projections are made based on the following assumptions;
(1) the US economy is expected to move into a slightly decelerating phase ( the projected real GDP growth rate is 3.5% in CY2005 and 3.3% in CY2006 ).
(2) the assumed average price of imported crude oil is $54/barrel in FY 2005 and $58/barrel in FY2006 ( the actual result in FY2004 was $38.70/barrel ) .
(3) the tax credit in income tax and in local inhabitants tax would be discontinued in January 2007.
- 10 -
Monthly Report of Prospects for Japan's Economy April 2006
The Japan Research Institute, Limited