Business Monitor International


Japan Business Forecast Report

Published 22 July 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Japan Business Forecast Report

Core Views

  • There are few good options available to the Japanese government to address its ballooning debt load, but we believe that debt monetisation could prove to be the most costly in terms of its medium-term economic impact. The government could find itself facing high inflation, stagnating economic activity, and rising pressure on bond yields if current policies persist. We maintain our bearish view on local assets given these growing risks.

  • Japan's Q413 GDP release does not make for optimistic reading. While real GDP came in at 1.0% q-o-q seasonally adjusted annualised, it marked the third consecutive quarter in which growth has slowed, showing the diminishing marginal returns of the ongoing monetary and fiscal stimulus measures. From a full-year 2013 growth rate of 2.7%, we expect to see a drop to 1.3% in 2014, which compares with consensus expectations of 1.5%. Even this relatively downbeat growth forecast faces serious downside risks.

  • Japan's trade figures for January missed expectations by a wide margin, with imports surging and exports stagnating. We expect to see the country record a current account deficit in 2014 as the weaker yen is insufficient to counteract the structural forces at play. Beyond 2014, the deficit is likely to widen as policies aimed at creating inflation will seriously undermine the domestic savings rate.

  • Inflationary trends in Japan are picking up pace rapidly. This trend is one which is likely to remain in place over the medium term, and we could even see concerns arising that inflation is rising too rapidly before long. The decision by the Bank of Japan (BoJ) to explicitly target a 2.0% y-o-y inflation rate back in 2013, via increasing government bond monetisation market a major turning point for the economy's inflation outlook. While we have seen an increase in loan growth over the past 12 months, by far the largest increase in liquidity has been driven by the government spending via fiscal deficits.

  • Prime Minister...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Rising Opposition To Thwart Abe's 'Third Arrow' Of Reforms
8
TABLE: Political Overview
8
Long-Term Political Outlook
10
Can Any Government Reverse National Decline-
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Self-Sustaining Recovery Looking Unlikely
14
TABLE: Economic Activity
14
Fiscal Policy
15
Reform Proposals Still Leave A Lot To Be Desired
15
TABLE: Fiscal Policy
16
Monetary Policy
17
More Easing To Come Despite Inflation Surge
17
TABLE: Monetary Policy
17
Exchange Rate Policy
19
JPY: Slight Bullish Bias
19
TABLE: Currency Forecasts
19
TABLE: Exchange Rate
19
Chapter 3: 10-Year Forecast
21
The Japanese Economy To 2023
21
Three Barriers To Growth
21
TABLE: Long-Term Macroeconomic Forecasts
21
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Business Environment Outlook
26
Institutions
26
Tabl e: BMI Busin ess And Operation Risk Ratings
26
Infrastructure
27
Tabl e: BMI Legal Fram ework Rating
28
Table: Labour Force Quality
29
Market Orientation
30
Table: Trade And Investment Ratings
30
TABLE: ASIA - ANNUAL FDI INFLOWS
31
Chapter 5: Key Sectors
33
Pharmaceuticals & Healthcare
33
TABLE: Pharmaceutical Sales, Historical Data And Forecasts
33
TABLE: Private Healthcare Expenditure Trends, Historical Data And Forecasts
35
TABLE: Healthcare Expenditure Trends, Historical Data And Forecasts
36
TABLE: Government Healthcare Expenditure Trends, Historical Data And Forecasts
36
Telecommunications
37
TABLE: Telecoms Sector - Mobile - Historical Data & Forecasts
38
TABLE: Telecoms Sector - Wireline - Historical Data & Forecasts
39
Other Key Sectors
41
Tabl e: Inf rast ructu re Secto r Key Indicato rs
41
Tabl e: Autos Secto r Key Indicato rs
41
Tabl e: Food & Drink Secto r Key Indicato rs
41
Tabl e: Defenc e & Secu rit y Secto r Key Indicato rs
42
Tabl e: Oil & Gas Secto r Key Indicato rs
42
tabl e: Freig ht Key Indicato rs
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Global Recovery Still On Track
43
Table: Global Assumptions
43
Table: Developed States, Real GDP GrowtH, %
44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Tabl e: Em erging Markets , Real GDP Growth, %
45

The Japan Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Japan and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Japan's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Japan's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Japan's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Japan, including currency volatility, the commodity price boom and protectionist policies.

The Japan Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Japan economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Japan through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Japan Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Japan and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Japan, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Japan over the next 5-years?

BMI's Japan country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Japan Market - Political Strengths, Weaknesses, Opportunities and Threats facing Japan.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Japan's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Japan's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Japan, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Japan's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Japan will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Japan's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express