Will Japan's Economy Remain in a Lull or Lapse into recession?(Sep 2015)

◆Japan’s economy enters a temporary lull: In light of the 2^nd preliminary Apr-Jun 2015 GDP release (Cabinet Office), we have revised our economic growth outlook. We now forecast real GDP growth of +1.0% in comparison with the previous year for FY15 (+1.1% in the previous forecast) and +1.7% in comparison with the previous year for FY16 (+1.9% in the previous forecast). Japan’s economy has entered a temporary lull, but we expect it to avoid falling into recession due to the following factors: (1) Continuation of the virtuous circle brought on by Abenomics, and (2) A gradual comeback in exports centering on the US. (See Japan’s Economic Outlook No. 186 Update(Summary), by Mitsumaru Kumagai, 11 September 2015.)

◆Will Japan’s Economy Remain in a Lull or Lapse into recession?: The major focal point for Japan’s economy in the near future is the question of whether the current situation is merely a temporary lull, or whether Japan will become mired in a recession. Judging from the performance of major demand components according to GDP statistics, there is some risk of the economy falling into recession. However, examination of three major judgment criteria (“merkmal”) suggests that Japan’s economy will be able to avoid a recession and head toward a moderate economic growth phase.