Japan s Role in the Global Economy -Before the G7 Summit

Transcription

1 Japan s Role in the Global Economy -Before the G7 Summit FPCJ Press Briefing 21 April 2016 Kazumasa Iwata President Japan Center for Economic Research

2 Fig. 1 World Stock Market Capitalization Note: The data was downloaded on 14 April, Source: World Federation of Exchanges 1

3 Fig.2 International Comparisons of Labor Productivity Growth 10 (y-o-y, %) 5 Japan average: 1.1% average: 1.0% average beyond 2011: 0.4% (y-o-y, %) US average: 2.2% average: 1.5% average beyond 2011: 0.7% (y-o-y, %) UK average: 1.9% average: 1.0% average beyond 2011: 0.9% -5 95:1 97:1 99:1 01:1 03:1 05:1 07:1 09:1 11:1 13:1 15:15:4 Source: Cabinet Office, Ministry of Internal Affairs and Communications (Japan); (Quarterly) Department of Commerce, BLS (US); Office for National Statistics, Eurostat (UK) 2

4 (%) Fig.3 Real Long-term Interest Rates Declining Across the World Japan US, UK, Germany & France (simple avg.) Note: The direct effects of the consumption tax hikes in Japan are excluded. Sources: Ministry of Finance, Bank of Japan, OECD (CY) 3

5 Fig.4 The Natural Rate of Interest and Real Interest Rate in Japan 6.0 (%) Natural Rate of Interest Real Interest Rate (Quarterly) 85:1 90:1 95:1 00:1 05:1 10:1 15:1 15:3 Source: Estimated by JCER Financial Research Team 4

6 Fig.5 The Natural Rate of Interest and Real Interest Rate in US Sources: Federal Reserve Bank of San Francisco, JCER Financial Research Team 5

7 Fig.6 The Natural Rate of Interest and Real Interest Rate in UK Source: Estimated by JCER Financial Research Team 6

8 Fig.7 Cash in Circulation (% of Nominal GDP) Sources: Central bank websites, National Statistical Offices, Eurostat, Cabinet Office 7

9 Fig.8 Negative Policy Rates Sources: Central bank websites 8

10 Fig.9 Japan s Shadow Short Rate (SSR) and Inflation Rate (%) 2.5 Shadow Short Rate (SSR) 2.0 Core CPI (All items less fresh food) (Monthly) /01 03/01 05/01 07/01 09/01 11/01 13/01 15/01 16/01 Note: The direct effects of the consumption tax hikes are excluded. Source: Estimated by JCER Financial Research Team with reference to Bank of Japan, Bauer and Rudebusch (2016) 9

11 Fig.10 5year/5year Inflation Swap Rate Note; Data is up to April 14, Source: Bloomberg 10

12 Fig.11 Japan's Short term Economic Outlook (y/y change, contributions, %, % points) F.Y F.Y F.Y Real Nominal Deflator Real Nominal Deflator Real Nominal Deflator Gross Domestic Product Domestic Demand* Private Consumption Private Residential Investment Private Non-residential Investment Change in Private Inventories* Public Investment Net Exports* Exports of Goods & Services Imports of Goods & Services Gross National Income Note: * indicates contribution to changes in GDP. Source: Cabinet Office, "Quarterly Estimates of GDP" 11

13 Fig.12 Japan's Economic Outlook for FY2015-FY2030 Source: JCER's estimates based on "System of National Accounts" (Cabinet office) 12

14 650 Fig.13 Estimated Real GDP Growth through Increased Software Investment (Tril. dollars) 636 Baseline Scenario Acceleration of ICT Investment Scenario (Additional 60 tril.yen in ICT investment from FY2015 through 2030, incl. 50 tril. yen software investment) 600 Forecast Real GDP will increase by 70 tril. yen in FY (FY) Source: Forecast by JCER 13

15 Fig.14 Level of labor productivity Source: OECD 14

16 Fig.15 Education Standards PISA (2012) PIAAC (2012) Note: Ranking shown in parentheses. Source: OECD 15

17 Fig.16 Real Effective Exchange Rate of the Japanese Yen Source: Bank for International Settlements The BIS Effective Exchange Rate Indices 16

18 Fig.17 Real Effective Exchange Rate of the US Dollar Source: Bank for International Settlements The BIS Effective Exchange Rate Indices 17

19 Fig.18 Real Effective Exchange Rate of the Euro(Euro area) Source: Bank for International Settlements The BIS Effective Exchange Rate Indices 18

20 Fig.19 After QQE Supplementary Measures JGB holdings (End of Sept 2015) 1Total assets (Tril. yen) 2Total JGB holdings (Tril. yen) 2/1 Ratio (%) Shift in ratio (%) Scenario 2 (After QQE supplementary measures) 3Total JGB holdings after shift (Tril. yen) 4 Supplementary measures JGBs available for sale (Tril. yen) Previous analysis (Scenario 1) JGBs available for sale (Tril. yen) Banks 1, Japan Post Bank Life insurance companies Japan Post Insurance Property insurance companies Public pension funds Total 1, 合計 Source: Estimated by JCER Financial Research Team 19

21 Fig.20 BOJ Necessary Amortization for JGB Purchases on the Increase Sources: BOJ, MOF 20

22 Fig.21 Household Financial Assets Sources: BOJ, ECB, FRB 21

23 Fig.22 Nonfinancial Corporate Business Financial Assets Sources: BOJ, ECB, FRB 22

24 Fig.23 BOJ Purchases of Real Estate Investment Trust is also reaching its Limit Note: Maximum purchasable amount for the BOJ= Market value of AA-rated REIT x 5% Sources: BOJ, NEEDS-Financial QUEST, Japan Credit Rating Agency, Ltd., Rating and Investment Information, Inc. 23

25 For more information, please see our JCER website. 24