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Showing posts from April, 2019

Probability of Brexit Scenario

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Japan Economic Outlook (April 2019)

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Despite a confirmed rebound in economic activity in the fourth quarter of last year, available data suggests that growth was weak in the first quarter of 2019. The average manufacturing PMI hit an over two-year low in Q1, as nominal exports contracted for the third consecutive month in February amid an economic slowdown in China. Moreover, consumer confidence deteriorated markedly at the outset of the year, which does not bode well for private consumption this year, while machinery orders—a leading indicator for investment in the coming three to six months—contracted for the third period in a row in January. In light of recent developments, the government downgraded its assessment of the economy for the first time in three years on 20 March. This could prompt Prime Minister Shinzo Abe to take action ahead of the election in the upper house, which is to be held this July.
Front Loaded consumer spending ahead of the planned sales tax hike in October and a recovery in gross fixed invest…

China-U.S. Trade War (Survey)

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If there is one factor that has kept the global economy in suspense for most of 2018 and thus far this year, it is of course the escalating trade tensions between the world’s two largest economies: China and the United States. In what appears to have been a positive development, the U.S. declared a truce on new trade tariffs for 90 days in early December, paving the way for both countries to start a new round of trade negotiations. Citing substantial progress in bilateral talks, U.S. President Donald Trump announced on 24 February that new tariffs would be postponed indefinitely. Since then, there has been rising optimism that both countries are close to sealing a trade agreement that would put an end to the Sino-American trade war. However, in reality, how close are we to a comprehensive agreement that would remove one of the key downside risks to the global economy? Which of the U.S. demands will be met? How can the deal be enforced? These are the pivotal questions we wish to shed …