outlook for the japanese economy in fiscal 2017 and fiscal ... · against a background of increases...

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22 March 2017

Economic Report

Outlook for the Japanese Economy in Fiscal 2017 and Fiscal 2018 (as of February 2017)

— Amid the Risk of a Possible Downturn, the Economy Will Show Moderate Improvement —

1. Current State of the Economy: The Economy Is Showing Moderate Improvement

The real GDP growth rate for the October–December period of 2016, which was announced on February 13,

2017, was +0.2% from the previous quarter (+1.0% at an annualized rate), the fourth consecutive quarter of

expansion. This result shows that the economy is showing moderate improvement (Chart 1). However, a closer

look at the figures shows that this expansion continues to be driven by the external sector, and growth in domestic

demand was virtually at a standstill and lacking in recovery momentum.

Personal consumption declined by a small margin of –0.0% from the previous quarter. Although personal

consumption in nominal terms rose 0.3% over the prior quarter, this was a reflection of increases in prices of food

products and gasoline. The personal consumption deflator increased 0.3%, the same margin as the increase in

consumption, and restrained the increase in consumption in real terms. In addition, worker compensation in real

terms remained level with the previous quarter, and there is a possibility that this was one factor restraining

consumption. (Real consumption year on year for the July–September quarter was up 2.9% but slowed to 2.0% in

the October–December period.)

Private residential investment in the October–December quarter rose a marginal 0.2%, the fourth consecutive

monthly increase. Although housing starts, which are a leading indicator for residential investment, are peaking

out, there is a time lag between housing starts and actual investments. However, the outlook for the

January–March and subsequent quarters is for a negative trend to set in.

In the corporate sector, capital investment has shifted to a rising trend and was up 0.9% over the previous quarter

for the October–December period, thus continuing its moderate rising trend. Corporations have not changed their

cautious stance to making major investments in Japan, but corporate financial results are improving, mainly in the

manufacturing sector, and it is believed likely that firm trends in investments for the maintenance and replacement

of facilities and R&D will continue.

The contribution of inventory investment to the real GDP growth rate was –0.1 percentage point, thus marking the

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second consecutive negative contribution to real GDP. As corporations are still making inventory adjustments,

pressure for inventory adjustments has receded significantly.

As a result of these factors, the contribution of the private sector as a whole was virtually level with the previous

quarter. On the other hand, the contribution of the public sector was –0.0 percentage point, or virtually unchanged

from the previous quarter. Demand for government services, including medical treatment, is on an upward trend,

and, although final government consumption expenditures remain firm and rose 0.4% for the quarter, the boosting

effect of the supplementary budget for fiscal 2015 had run its course, and government investment decreased

1.8% for the quarter, for the second quarter-to-quarter decline, and could not offset the stagnation in domestic

demand.

The contribution of domestic demand to GDP growth, including the private and public sectors, was–0.0

percentage point, or was virtually flat, but, in contrast, external demand contributed +0.2 percentage point, the

second consecutive quarter-to-quarter positive figure, thus boosting the GDP overall. Exports of automobiles and

smartphone-related electronic components and devices continued to be favorable and rose 2.6% for the quarter,

continuing the firm trend seen in the data for the July–September quarter. On the other hand, imports also rose,

by 1.3%, for the quarter, the first increase in five quarters, but the rate of increase was slower than for exports.

The growth rate of nominal GDP over the previous quarter was 0.3% (an annualized rate of +1.2%), the fourth

consecutive quarterly rise. In addition, the GDP deflator, which reflects comprehensive price movements in the

overall economy, slipped 0.1%, year on year, the second consecutive quarterly decrease. (On a seasonally

adjusted basis, the GDP deflator rose by a small positive margin of 0.1%.) Although the margin of decline in the

domestic demand deflator shrank from –0.8% in the July–September period to –0.3% in the October–December

quarter, this was due to the effect of the bottoming out of crude oil and other resource prices and shrinkage in the

margins of decline in import prices owing to the decline in the value of the yen.

Donald Trump has now been inaugurated as president of the United States, but his inaugural address contained

no new information regarding economic or fiscal policy. In addition, the White House website, which was renewed

following the inauguration, repeated previous information on the implementation of such policies as the U.S.

withdrawal from the TPP (Trans-Pacific Partnership), the renegotiation of NAFTA (North American Free Trade

Agreement), progress toward job creation, and the reduction in taxes, but no specific details were announced on

these and other policies.

On the other hand, after the beginning of 2017, the so-called “Trump” market, which had set in after the

presidential election, with increasing stock prices, appreciation of the U.S. dollar and rising interest rates, paused,

and markets entered a watching and waiting period to see which directions policies would take. Interest focused

especially on trade issues. President Trump made repeated protectionist statements, including criticism of unfair

practices by Japan in automobile trade. No severe demands were made at the top-level Japan-U.S. trade talks

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that began on February 10, but, depending on the directions that economic discussions take going forward,

conflicts between Japan and the United States may emerge, and this may lead to developments, including a

sudden upward revaluation of the yen.

2. Outlook for the Japanese Economy in Fiscal 2017 and Fiscal 2018

―Amid the Risk of a Possible Downturn, the Economy Will Show Moderate

Improvement―

Assumptions underlying this outlook include the following: The positive effects of the second supplementary

budget for fiscal 2016, which will be mainly public investments, will begin to emerge in the January–March quarter

of 2017. We have assumed that no additional economic policies will be implemented after the beginning of fiscal

2017. In addition, just as when the previous increase in the consumption tax rate to 8% on new housing

purchases, we believe it is likely that the government will adopt a special measure to exempt such new housing

purchases from the higher consumption tax rate and tax such purchases at the previous tax rate, provided the

contracts for construction are concluded six months prior to the tax increase. (This time, the exemption period will

last until March 31, 2019.) We believe this will bring a surge in demand for some types of housing in the latter half

of fiscal 2018. However, we have assumed a surge in demand for other items will not occur during the forecast

period this time.

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

13 14 15 16

Chart 1. Real GDP growth rate by demand (Quarterly)

Private ConsumptionPrivate Capital InvestmentGovernment ExpenditureInventory InvestmentExportsImportsReal GDP Growth

Source: Cabinet Office "Quarterly Estimates of GDP"

(Qr/Qr, %)

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Regarding the effects on the domestic economy now that Trump has become president, since there are many

uncertainties about what policies will be implemented, we have assumed that the direct impact of any factors that

may restrain Japan’s exports will be minimal. In addition, we believe that it will be difficult to maintain the

expectations of expansion in the U.S. economy, due to positive economic policies, that have arisen since the

presidential election for a prolonged period; there is a strong possibility that these expectations may gradually

diminish over time. Moreover, throughout the forecast period, risks will remain that extreme statements by Trump

may create turmoil in financial markets and bring a downturn in the world economy.

In fiscal 2016, the outlook is for the real GDP to also maintain a positive rate of growth in the January–March

quarter of 2017. There is a possibility that the high rates of expansion in exports and the momentum of industrial

production may weaken, and private residential investment is expected to shift to a decline from the previous

quarter. However, as the supplementary budget for fiscal 2016 is implemented, public investment will begin to

rise, and private capital investment will maintain an increasing trend. In addition, although there are concerns that

rising pressures on prices may restrain household purchasing power, as employment and income conditions

continue to improve, consumer spending is expected to continue to remain firm. The real rate of GDP growth in

fiscal 2016 is forecast to be +1.3%, and growth in GDP will be positive for the second consecutive year (Chart 3).

In fiscal 2017, moderate expansion in the economy is forecast to continue, and real GDP growth is forecast to be

+1.2%, the third consecutive year of positive growth.

Against a background of increases in resource prices and a cheaper yen, upward pressure on prices will rise,

even though the supply and demand balance for labor will remain tight, and real wages are expected to shift

downward year on year. For this reason, there is a possibility that the increase in consumer spending will be only

moderate. Private residential investment also will continue to decline in the wake of fewer housing starts.

Despite these circumstances, although the increase in exports of automobiles and smartphone-related materials,

which has driven the rise in industrial production since the latter half of fiscal 2016, will run its course, and, against

a background of recovery in overseas economies, the pace of increase in exports and production will probably be

maintained. In addition, during the first half of fiscal 2017, the boosting effect of the supplementary budget for

fiscal 2016 will continue, and capital investment will continue to rise moderately, supported by the improvement in

corporate performance, and these factors will provide support for the economy.

Since there is no clear driving force for the economy, although it will be difficult for the real growth in GDP to

accelerate, throughout the forecast period, moderate increases are expected to continue . After the exclusion of

the carryover effect (+0.4%), the real rate of growth in the fiscal year as a whole is forecast to be +0.7%, and the

tempo of expansion will weaken compared with the previous year (Chart 2).

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In fiscal 2018, the upsurge in demand prior to the 2020 Tokyo Olympics will rise to a peak, and the

redevelopment projects in the Tokyo metropolitan area will give a boost to the economy. In addition, as overseas

economies recover, the increase in exports is expected to continue. However, since we have assumed that no

additional economic policies will be implemented, public investments will begin to decline and, because of the rise

in the price level along with gains in resource prices and the depreciation of the yen, real wages will decline from

the levels of the previous year and will restrain growth in consumer spending. For these reasons, the real rate of

growth in GDP is forecast to weaken to +1.0%. After the exclusion of the carryover effect of +0.4%, the real rate of

growth in the fiscal year as a whole is forecast to fall to +0.5% as the tempo of growth slows compared with the

previous fiscal year.

The outlook for principal sectors and other economic indicators is as follows.

Carry-over from the previous year

Growth rate during the year

Real GDP growth rate

(A) (B) (A)+(B)FY2015(actual) 1.3 % 0.0 % 1.3 %FY2016

(forecast) 0.4 % 0.9 % 1.3 %FY2017

(forecast) 0.4 % 0.7 % 1.2 %FY2017

(forecast) 0.4 % 0.5 % 1.0 %

Source: Cabinet Office, "Quarterly Estimates of GDP"

Chart 2.Real GDP growth rate and the carryover effect

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(1) Households As structural demographic change occurs, with the productive-age population (15 to 64 years) decreasing, the

supply and demand balance for labor during the forecast period is expected to remain tight, and, in some

industries, the feeling that labor is in short supply will likely become more serious. However, the outlook is for the

number of employed persons to increase gradually. The outlook is for the unemployment ratio to decline to 3.1%

in fiscal 2016, to 3.0% in fiscal 2017, and then to 2.9% in fiscal 2018.

This kind of environment, where employment conditions are improving, is normally expected to bring increases in

wages. However, during the 2017 spring labor offensive, corporations are taking a cautious stance regarding

increasing base wages, and the Keidanren (Japan Business Federation) is calling on corporations to take the

perspective of annual increases in incomes. For this reason, it is believed likely that bonuses will continue to

increase, but, on the other hand, base wages may decline from the level of the previous year. In part because of

the rising percentage of part-time employees receiving lower wages, principally female employees and, the

increase in total cash compensation of workers may amount to +0.3% in fiscal 2017, which will be slightly lower

than the increase of +0.4% in fiscal 2016, and then may settle at +0.4% in fiscal 2018. In addition, since prices of

resources will rise and the yen will be weaker, upward pressures on prices may increase, and, in real terms, the

outlook is for an increase of +0.4% in fiscal 2016, and then followed by –0.4% in fiscal 2017, and then –0.3% in

fiscal 2018.

On the other hand, since the number of employed persons is increasing, the outlook is for compensation in

0.5 0.9

2.6

-0.4

1.3 1.3 1.2 1.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

11 12 13 14 15 16 17 18

Chart 3. Real GDP growth rate by demand (Fiscal year)

Private Consumption Private Capital Investment Government ExpenditureInventory Investment Exports ImportsReal GDP Growth

Forecast

(Yr/Yr, %)

Source: Cabinet Office "Quarterly Estimates of GDP"

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nominal terms to rise a firm +2.1% in fiscal 2016. Thereafter, although the pace will slow, wages are forecast to

rise +1.4% in fiscal 2017, followed by +1.3% in fiscal 2018. However, in real terms, the increase will be +2.2% in

fiscal 2016, followed by +0.7% in fiscal 2017 and a marginal rise of +0.6% in fiscal 2018.

The slowing of growth in real incomes will be a factor restraining consumer spending because of the decline in

household purchasing power. In fiscal 2016, the increase in consumer spending is forecast to be a moderate

+0.6% year on year, in part because of unseasonable weather conditions and other factors. Thereafter, in both

fiscal 2017 and fiscal 2018, growth will slip to a low +0.5%.

Residential investment, as measured by the number of new housing starts, has recently peaked, mainly for rental

housing and condominiums. Since starts of rental housing had been at a high level, the feeling of excess supply

has grown stronger, the inventory of unsold condominiums in the Tokyo metropolitan region has risen, and there

is a likelihood of strong movements toward adjusting inventories. Since the vacancy rate of rental housing is

increasing and prices of condominiums have peaked, still at a high level, the level of new starts as a whole is

gradually declining.

Reflecting the increase in new housing starts in the first half of fiscal 2016, the level of starts for fiscal 2016 is

forecast to increase to 967,000, but then decrease to 904,000 in fiscal 2017, and then to 875,000 in fiscal 2018.

Note that at the time of the scheduled increase in the consumption tax rate in October 2019, just as was the case

at the time of the previous increase in the tax rate to 8%, the previous tax rate will be applied, as a special

measure, to housing construction that is contracted for six months before the scheduled new tax rate comes into

effect. As a result, a surge in construction starts is expected to occur near the end of fiscal 2018.

(2) Corporations In fiscal 2016, the corporate sector is expected to have passed through the worst phase of the recent slowdown in

the first half, and performance will improve in the second half. During the first half, corporate performance

deteriorated because of the impact of yen appreciation on exporting companies and the stagnation in consumer

spending on consumer goods companies. However, in the second half of fiscal 2016, the increase in unit volume

of exports rose and the decline in the value of the yen will boost performance, mainly of exporting companies. In

addition, another factor supporting the improvement in corporate results will be the maintenance of the high

profitability business position that corporations have achieved thus far through restructuring.

Ordinary profit in fiscal 2016 is forecast to rise 2.7% over the previous fiscal year, and, even following five

consecutive years of profit gains, improvement will be seen especially in the manufacturing sector, and overall

ordinary profit is expected to rise 1.0% year on year in fiscal 2017, and then by 1.5% in fiscal 2018. While Japan’s

terms of trade have deteriorated as a result of increases in resource prices and continued rises in personnel

costs, on the other hand, sales have increased because of recovery in domestic and overseas demand and other

factors, including the boost coming from the continuing decline in the value of the yen.

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Although the cautious stance of corporations regarding capital investment is expected to continue, companies

have ample cash on hand and are unlikely to cut capital spending for base necessities. For this reason, along with

the improvement in performance, companies are expected to resume some investments that they have

postponed, and make investments for coping with labor shortages, investments for maintaining competitiveness,

investments for the maintenance and replacement of existing equipment, and investments in IT systems and

software. As a result, capital investment may turn upward moderately and become a factor supporting the

economy. In addition, investments in areas where supply shortages exist, including the construction of hotels,

office buildings, warehouses, and logistics centers as well infrastructure projects, such as railways and airports,

are expected to remain firm.

Nevertheless, companies are expected to continue to refrain from aggressive investments to increase capacity in

Japan, and this will preclude any major increases in investment. Although some companies and industries are

seen as likely to move production facilities they had previously located overseas back to Japan, this trend is not

widespread across industries. In addition, although lending interest rates are declining following the introduction

of negative interest rates, corporations have ample cash flows, and the level of interest rates is already low;

therefore, it seems unlikely that the decline in interest rates will kindle the desire to invest among corporations.

Real private capital investment is expected to rise 1.7% in fiscal 2016 and thereafter remain firm, rising 2.0% in

fiscal 2017. Looking further ahead, redevelopment projects in the Tokyo metropolitan area are expected to

increase in advance of the 2020 Tokyo Olympics, and the outlook is for a gain of 3.2% in real capital investment in

fiscal 2018.

(3) Government Regarding public investment, the positive impact of the allocations under the second supplementary budget for

fiscal 2016 is expected to emerge in the January–March quarter of 2017. Compared to the 1.5% decline in public

investment in fiscal 2016, public investment is forecast to rise 4.3% in fiscal 2017, the first positive figures in four

years, and this will be a factor boosting the economy.

In fiscal 2018, a factor raising public investment will be the peaking of demand for infrastructure and other

investments in preparation for the 2020 Tokyo Olympics. However, the positive impact of budget allocations under

the second supplementary budget for fiscal 2016 will run their course, and overall public investment will shift to a

decline of 2.5%.

Government consumption expenditures, however, are quite likely to continue to rise, mainly for medical

expenditures, along with the continued demographic aging of the population.

(4) External Sector

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Although the positive impact of exports of automobiles and smartphone-related materials is forecast to diminish

after the beginning of fiscal 2017, the recovery in overseas economies is expected to maintain a rising trend in

exports throughout the forecast period. However, a sharp rise in export growth should not be expected because of

the impact of the relocation of many production bases overseas, even as the yen weakens. The movement seen

in some manufacturing industries of bringing production facilities back to Japan to avert increases in import costs

will be on a small scale, and it is unlikely there will be a major movement toward resuming exports from Japan.

Regarding overseas economies, since the summer prior to the 2016 presidential election in the United States, the

economy has been expanding at a moderate pace. Real GDP growth rate in the October–December quarter

(preliminary figure) expanded by 1.9% year on year before seasonal adjustment. Although this figure was lower

than the 3.5% reported in the previous quarter, private capital investment, where improvement had been lagging,

is showing gradual expansion in the margin of improvement and, as labor market conditions improve, consumer

spending is continuing to be firm and on an upward trend. Going forward, the pace of expansion in the U.S.

economy is expected to accelerate moderately, and the real GDP growth rate will rise to +2.3% in 2017. This

outlook is for the rate of expansion to rise to +2.6% in 2018, which will be the first rate of growth in the latter half of

the 2.0% to 3.0% range in three years. As the pace of expansion in the U.S. economy rises, increases in wages

and inflation are forecast, and there is a possibility of about two hikes in interest rates in both 2017 and 2018.

However, there is a risk that the combination of policies to reduce taxes, increase infrastructure investments, and

other factors, against a background of accelerating expansion in the real economy, may cause more overheating

of the economy than has been expected. In that case, interest rates may increase along with the rise in the price

level, and this may bring a combination of concern about deterioration in fiscal conditions and weakening of

economic conditions as a result of higher interest rates.

In the Eurozone, against a background of a decline in the value of the Euro, which is bringing increases in

exports, and the continuation of moderate economic expansion, real GDP expanded 0.5% (preliminary figure) in

the October–December quarter, representing the second consecutive increase in this figure. However, there is a

risk that turmoil in financial markets in Europe and other factors may have a negative impact on the economy. In

2017, in certain countries of Europe, a series of major elections are scheduled (a general election in the

Netherlands in March, a presidential election in France in April/May with a general election in June, and a general

election in September in Germany). Since issues related to resistance to immigration and widening income

differentials have arisen in each of these countries, we cannot rule out the possibility that unexpected

developments may occur, such as those caused by the election of President Trump in the United States. In

addition, concerns about a possible “hard Brexit” are rising as the United Kingdom proceeds with its departure

from the European Union.

In China, the economy has begun to improve as a result of the positive impact of economic policies, and the real

GDP growth rate in the October–December quarter was +6.8% year on year, indicating that the brakes have been

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applied to the downward trend in growth rates. Although the downtrend in growth rates is forecast to continue, the

implementation of economic policies, including the “One Belt, One Road” concept (the Silk Road Economic Belt

and the 21st Century Maritime Silk Road plans) as well as China’s 13th five-year plan, will be factors providing

support for the economy.

Moreover, the currencies of the newly emerging and resource-producing countries, which were declining because

of concerns about capital outflows in the wake of increases in U.S. interest rates following the U.S. presidential

election, are now gradually strengthening, and, since the beginning of 2017, international financial markets have

been generally stable. Also, since OPEC countries have adopted a stance of abiding by production cutback

agreements, the price of crude oil is on a moderate rising trend, and other resource prices are generally

strengthening, thus contributing to stability.

An element of uncertainty is whether positive expectations regarding President Trump will run their course, and,

as a result of the ensuing political confusion, international financial markets will be plunged into turmoil, and the

world economy may slow. Even so, if this turmoil is short-lived, the trends toward recovery in the world economy

will most likely take a firmer hold.

On the other hand, reflecting the improvement in domestic demand and the rising penetration of imports into the

Japanese market, growth in imports is expected to continue. The contribution of external demand is expected to

rise to +0.6 percentage point in fiscal 2016, decline to +0.2 percentage point in fiscal 2017, and then weaken and

level out in fiscal 2018.

(5) Production The index of industrial production began to rise again over the previous quarter beginning in the April–June

quarter of 2016, and has subsequently risen for three consecutive quarters. During the October–December

quarter, reflecting the increase in exports, the industrial product had risen to 2.0% over the same quarter of the

previous year. Increases in automobiles and smartphone-related materials boosted the overall total. Since the

positive effect of exports of automobiles and smartphone-related materials has run its course, export momentum

is expected to weaken, but, along with the improvement in domestic and overseas demand, the upward trend is

forecast to continue.

In fiscal 2016, industrial production is expected to rise 1.2% over the previous fiscal year, the first increase in

three years. Thereafter, industrial production is forecast to rise 2.5% in fiscal 2017 and continue to expand by

1.1% in fiscal 2018.

(6) Commodity Markets, Foreign Exchange, and Prices After the beginning of 2016, some OPEC countries made agreements aimed reducing production with the aim of

eliminating the excess supply of crude oil, and, as a result, prices of crude oil began to rise. During the ensuing

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rise in prices, producers of shale oil in the United States made movements toward expanding production and

although there was a possibility that the rise in prices would be restrained, the recovery in the world economy led

to a gradual increase in demand. As a result, the price of crude oil began to rise moderately. However, in part

because of the trend toward energy conservation and improvements in automobile gas mileage, the rise in

demand would be only moderate, and the pace of increase in oil prices is forecast also to moderate.

Regarding the yen/U.S. dollar exchange rate, as a result of the worldwide tendency to avoid risk taking, the yen

began to rise in value from the middle of 2015. After the U.S. presidential election, positive expectations of

expansion in the U.S. economy and the rising prospects for a tighter monetary policy there, the yen weakened

and the dollar strengthened. However, after the beginning of 2017, President Trump made statements aimed at

restraining the strengthening of the dollar and weakening of the yen as well as statements pointing to the problem

of the U.S. trade deficit with Japan, and this resulted in a slight rise in the value of the yen. Looking ahead, the

outlook is for the interest differential between Japan and the United States to widen, and conditions conducive to

a weakening of the yen and strengthening of the dollar have continued. However, since it is believed likely that the

market has already taken account of the expansion in the differential between yen and dollar interest rates, the

pace of depreciation of the yen will likely to be only gradual. In order for the yen to weaken beyond ¥120 to the

dollar, it will likely be necessary for the rise in U.S. interest rates to accelerate and for other conditions to be met.

On the other hand, if Trump’s statements aimed at restraining the appreciation of the dollar and depreciation of

the yen and the confusion in the political situations in the United States and Europe cause turmoil in international

financial markets, the tendency to avoid risk taking may strengthen, and there is a possibility of a sharp

appreciation of the yen.

As a result of the increase in crude oil prices and depreciation of the yen, upward pressures on prices in Japan

are mounting. In January, the domestic corporate goods price index rose over the previous year, and the

consumer price index (excluding fresh food) is forecast to rise over the level of the prior year as early as the end

of fiscal 2016. Increases in personnel and other costs are bringing upward pressure on service prices, and this is

a factor pushing overall prices upward. However, there are limits to how much of these cost increases can be

passed on to consumers, and, during the forecast period, and the increases in the consumer price index are not

expected to reach the Bank of Japan’s target of 2%. The year-on-year rise in the consumer price index (including

fresh food) in fiscal 2017 is forecast to be +0.7%, due mainly to higher energy prices. But this figure will not

accelerate, and the rise in the consumer price index in fiscal 2018 is forecast to be +0.6%.

(7) Financial Policy and Interest Rates On September 21, 2016, the BOJ introduced a new policy framework entitled “Quantitative and Qualitative

Monetary Easing with Yield Curve Control” with the aim of the further relaxation of monetary policy. It is expected

that the BOJ will leave the negative margin of the policy interest rate at –0.1% and maintain 0% interest on

10-year government bonds. Therefore, the outlook is basically for these rates and long- and short-term interest

rates to remain at current levels.

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Since upward pressures on price increases are rising moderately and since negative interest rates at even

deeper levels may lead to instability in the financial system, at yen-dollar exchange rates of more than ¥110 to

US$1, there is a strong possibility that the BOJ will not adopt additional monetary easing policies. Decisions on

the exit strategy will probably be postponed until April 2018 when BOJ Governor Haruhiko Kuroda’s term as

governor will end.

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【GDP demand】Yr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

(actual) (actual) (forecast) (forecast) (forecast)

Contribution of domestic demand -1.1 1.1 0.6 0.9 1.0

0.5 0.3 -0.2 -0.1 0.2

Contribution of external demand 0.6 0.2 0.6 0.2 0.0

2.5 1.4 -0.1 -0.5 0.2

【Overseas economy and market data】Yr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018


Real GDP (US) (CY) 2.4 2.6 1.6 2.3 2.6 Real GDP (Euro zone) (CY) 1.2 1.9 1.7 1.5 1.5 Real GDP (Asia) 6.5 6.1 6.0 5.9 5.9

Real GDP (China) 7.3 6.9 6.7 6.5 6.3 Yen/U.S.Dollar 109.9 120.1 108.1 112.3 114.4 Uncollateralized call rates (O/N) (%)* 0.068 0.063 -0.047 -0.050 -0.025 TIBOR (3months) 0.196 0.155 0.059 0.060 0.105 Newly issued government bond yields (10years) (%) 0.48 0.29 -0.05 0.09 0.18 WTI future price (near month contract, US dollar/barrel) 80.5 45.0 48.2 55.2 58.5 Dubai crude oil prices (US dollar/barrel) 83.6 45.6 47.2 55.1 58.0

Economic Outlook for fiscal 2016-2018

1.5

1.2

1.0

0.5

-2.2

3.2

0.4

1.1

-2.5

1.5

* actual=average, forecast=end of period

GDP deflator

2.6 2.9

Import of goods and services

Public investment -2.1 -2.0 -1.5 4.3

4.2 -0.2 -1.1 1.7

Export of goods and services 8.7 0.8

Government final consumption expenditure 0.4 2.0 0.8

-0.1

1.2

Contribution of inventory investment

Government expenditure

0.6 1.7 2.0

Housing investment -9.9 2.7

Private capital investment 2.5

1.2 0.4 1.8

0.5 0.6 0.5

6.0 -1.6

Private consumption -2.7

2.8 1.2 0.6

Real GDP -0.4 1.3 1.3

Nominal GDP 2.1

1.2

forecast

forecast

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【External demand (export and import)】Yr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018


Value of exports (Yen base) 5.4 -0.7 -4.7 6.3 2.4 1.3 -2.7 2.2 2.4 0.7

Value of imports (Yen base) -1.0 -10.3 -11.2 14.9 4.0-2.1 -1.8 0.4 2.2 1.3

Balance (trillion yen) -9.1 -1.1 3.8 -1.6 -2.9 Current account balance (trillion yen) 8.7 18.0 19.8 15.5 14.8

balance on goods (trillion yen) -6.6 0.5 5.3 0.3 -0.8 balance on service (trillion yen) -2.7 -1.1 -1.2 -1.1 -0.9 balance on income (trillion yen) 20.0 20.6 17.7 18.4 18.7

【Corporations】Yr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018


Industrial production -0.5 -1.0 1.2 2.5 1.1 Inventory index 6.1 1.8 -6.5 1.2 0.8 Sales 1.4 -1.3 -0.1 3.1 1.6 Ordinary Profits 5.9 4.9 2.7 1.0 1.5

【Income and employment】Yr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018


Income per capita 0.5 0.2 0.4 0.3 0.4Scheduled -0.2 0.3 0.2 0.1 0.2

Non-scheduled 1.6 0.4 -0.7 -0.4 0.4 Wage increase rate (%) 2.19 2.38 2.14 2.00 2.10 Employee 0.8 1.0 1.4 0.8 0.7 Nominal compensation of employees* 1.8 1.5 2.1 1.4 1.3 Unemployment rate (%) 3.5 3.3 3.1 3.0 2.9*GDP base

【Goods prices】Yr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018


Domestic corporate goods prices 2.8 -3.3 -2.1 2.2 0.7-0.1 2.2 0.7

Consumer prices 3.0 0.2 0.0 0.6 0.5 1.0 3.4 1.1

excluding freshfood 2.9 -0.0 -0.2 0.7 0.6 0.9 0.7 0.6

【 New housing starts】 annualized, ten thousand unitsYr/Yr、 %

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018


88.0 92.1 96.7 90.4 87.5-10.8 4.6 5.0 -6.5 -3.3 27.8 28.4 29.4 29.4 29.0-21.1 2.2 3.3 0.0 -1.5 35.8 38.4 41.9 36.3 33.8-3.1 7.1 9.2 -13.3 -6.8 23.6 24.7 24.8 24.1 24.1-8.9 4.5 0.4 -2.6 -0.3

New housing starts

Owned

Rented

Built for Sale

2.2 0.6 0.2 0.4

Ammount (Yr/Yr,%)

Ammount (Yr/Yr,%)

excluding food (excluding alcoholic beverages) and energy 0.2

excluding tax effects



forecast

forecast

forecast

forecast

forecast

15 / 18

【GDP demand】Yr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018


Contribution of domestic demand 2.4 0.4 0.7 0.5 0.9

-0.3 0.1 0.7 -0.2 -0.1

Contribution of external demand -0.4 -0.0 0.5 0.5 0.3

-0.3 1.7 2.0 0.3 -0.6

【Overseas economy and market data】Yr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018


Real GDP (US) (CY) 2.4 2.6 1.6 2.3 2.6 Real GDP (Euro zone) (CY) 1.2 1.9 1.7 1.5 1.5 Real GDP (Asia) 6.5 6.1 6.0 5.9 5.9

Real GDP (China) 7.3 6.9 6.7 6.5 6.3 Yen/U.S.Dollar 105.8 121.0 108.8 112.1 114.1 Uncollateralized call rates (O/N) (%)* 0.068 0.073 -0.027 -0.050 -0.038 TIBOR (3months) 0.206 0.168 0.076 0.060 0.070 Newly issued government bond yields (10years) (%) 0.55 0.36 -0.05 0.09 0.12 WTI future price (near month contract, US dollar/barrel) 93.0 48.8 43.3 54.3 57.8 Dubai crude oil prices (US dollar/barrel) 96.7 51.0 41.4 54.5 57.3

1.4

0.6

1.2

0.6

-0.0

1.9

1.5

4.1

0.9

3.5

3.3 1.3

Real GDP 2.0 0.3 1.2 1.0

Nominal GDP 1.7 2.1

Economic Outlook for calendar 2016-2018

-0.4 0.4

Housing investment 8.0 -4.3 -1.6 5.6

Private consumption 2.4 -0.9

1.2 1.0

Contribution of inventory investment

Government expenditure 2.5 0.7 0.8

Private capital investment 3.7 5.2

0.7

Government final consumption expenditure 6.7 0.7 -2.2 -2.7

1.6 1.5

Export of goods and services 0.8 9.3 3.0 1.2

Public investment 1.5 0.5


* actual=average, forecast=end of period

0.1 -1.7

GDP deflator

3.3 8.3

forecast

forecast

16 / 18

【External demand (export and import)】Yr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018


Value of exports (Yen base) 5.4 -0.7 -4.7 6.3 2.4 1.3 -2.7 2.2 2.4 0.7

Value of imports (Yen base) -1.0 -10.3 -11.2 14.9 4.0-2.1 -1.8 0.4 2.2 1.3

Balance (trillion yen) -9.1 -1.1 3.8 -1.6 -2.9 Current account balance (trillion yen) 4.5 3.9 16.4 20.6 16.4

balance on goods (trillion yen) -8.8 -10.5 -0.6 5.6 1.4 balance on service (trillion yen) -3.5 -3.0 -1.7 -1.0 -1.2 balance on income (trillion yen) 17.7 19.4 20.7 18.1 18.3

【Corporations】Yr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018


Industrial production 2.1 2.1 -1.2 -0.2 3.4 Inventory index 6.2 0.0 -4.6 1.4 0.8 Sales 3.0 -0.5 -1.8 3.5 1.6 Ordinary Profits 10.9 7.5 -1.8 2.9 1.5

【Income and employment】Yr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018


Income per capita 0.4 0.1 0.5 0.3 0.3Scheduled -0.4 0.3 0.2 0.2 0.2

Non-scheduled 2.7 0.4 -0.6 -0.3 0.1 Real wage indices -2.9 -0.8 0.6 -0.5 -0.4 Number of mployees 0.7 0.8 1.6 0.9 0.7 Nominal compensation of employees* 1.6 1.3 2.3 1.5 1.3 Unemployment rate (%) 3.6 3.4 3.1 3.0 2.9*GDP base

【Goods prices】Yr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018


Domestic corporate goods prices (Yr/Yr,%) 3.2 -2.3 -3.5 2.3 1.0 1.0 2.3 1.0

Consumer prices 2.7 0.8 -0.1 0.6 0.5 1.2 0.6 0.6

excluding freshfood 2.7 0.5 -0.3 0.6 0.6 1.1 0.5 0.7

【 New housing starts】 annualized, ten thousand unitsYr/Yr、 %

CY 2014 CY 2015 CY 2016 CY 2017 CY 2018(actual) (actual) (forecast) (forecast) (forecast)

89.4 90.9 96.7 91.9 87.5-8.6 1.7 6.4 -5.0 -4.8 28.7 28.3 29.2 29.5 28.9-18.9 -1.2 3.1 1.1 -2.2 36.3 37.8 41.8 37.5 34.2 2.4 4.3 10.4 -10.2 -8.9 23.8 24.1 25.1 24.3 24.0-10.0 1.5 4.0 -3.0 -1.5

Rented

Built for Sale

1.9 1.0 0.4 0.1

New housing starts

Owned



excluding food (excluding alcoholic beverages) and energy


Ammount (Yr/Yr,%)

Ammount (Yr/Yr,%)

0.4

forecast

forecast

forecast

forecast

forecast

17 / 18

Qr/Qr,%Yr/Yr,%

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3(Qr/Qr,%) 0.2 0.5 -0.3 0.8 0.3 0.2 0.3 0.2 -0.2 0.4 0.1 0.5 0.3 0.3 0.1 0.5

Annualized rate 1.0 2.1 -1.0 3.1 1.2 0.7 1.2 1.0 -1.0 1.5 0.3 1.9 1.2 1.2 0.6 2.0(Yr/Yr,%) 3.3 3.9 2.6 1.2 1.3 1.0 1.6 0.9 0.5 0.7 0.4 0.9 1.3 1.2 1.1 1.2(Qr/Qr,%) -0.1 0.2 -0.3 0.6 0.4 0.3 0.2 0.3 0.3 0.3 0.3 0.2 0.1 0.3 0.2 0.2

Annualized rate -0.4 0.8 -1.2 2.3 1.8 1.4 1.0 1.2 1.3 1.2 1.3 0.9 0.5 1.2 0.8 1.0(Yr/Yr,%) 1.8 2.1 1.1 0.3 0.9 1.1 1.7 1.4 1.1 1.2 1.2 1.2 1.0 0.9 0.9 1.0

Contribution of domestic demand　(Qr/Qr,%) 0.0 0.3 -0.3 0.2 0.5 -0.1 -0.0 0.3 0.4 0.3 0.3 0.2 0.1 0.3 0.2 0.3-0.4 0.5 -0.6 0.4 0.2 0.3 -0.0 0.1 0.2 0.1 0.2 0.0 0.1 0.1 0.2 0.1 1.0 1.2 -0.1 -0.1 0.4 0.3 0.9 0.7 0.7 0.4 0.6 0.5 0.4 0.5 0.4 0.5 1.1 1.5 -1.0 1.4 3.3 2.4 0.2 -1.2 -1.0 -0.2 -0.1 -0.7 -1.8 -0.1 0.5 0.1-3.1 6.1 4.7 3.0 5.4 6.5 7.3 4.6 0.3 -2.1 -2.5 -2.0 -2.8 -2.6 -2.1 -1.3-1.4 0.6 0.5 -0.3 1.3 -0.3 0.9 0.2 0.4 0.7 0.7 0.8 0.8 0.9 0.8 0.8 1.4 1.0 1.0 -0.6 2.1 1.0 1.7 2.1 1.2 2.1 1.9 2.6 2.9 3.1 3.3 3.3 0.4 -0.2 -0.1 -0.2 0.2 -0.3 -0.1 0.0 0.0 0.0 0.0 0.1 0.0 0.1 -0.1 0.0 0.2 0.1 0.3 0.9 -0.7 0.0 -0.0 0.8 0.9 0.4 0.1 -0.2 0.0 0.2 0.2 0.3 1.6 1.1 0.6 1.4 0.8 0.6 0.1 0.1 1.6 2.0 2.3 1.3 0.6 0.2 0.1 0.7 0.1 0.5 0.7 1.4 -1.1 0.3 0.4 0.3 0.2 0.2 0.3 0.3 0.3 0.2 0.2 0.3 1.7 1.6 2.2 2.7 1.4 1.2 0.9 -0.0 1.2 1.2 1.2 1.2 1.2 1.2 1.1 1.0 0.6 -1.1 -1.5 -1.1 1.1 -0.7 -1.8 2.5 3.5 1.1 -0.7 -2.2 -1.0 0.1 0.0 0.3 2.0 -0.2 -4.6 -3.4 -2.1 -1.8 -3.0 0.8 3.7 5.7 6.4 1.6 -2.7 -3.7 -3.2 -0.7

Contribution of external demand　(Qr/Qr,%) -0.1 -0.1 0.0 0.3 -0.0 0.4 0.2 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.0 -0.0 -0.0-3.6 2.1 -0.8 0.9 -1.2 2.1 2.6 0.3 0.2 0.4 0.5 0.5 0.4 0.2 0.3 0.3 2.1 3.1 -0.4 -1.4 0.5 1.0 4.7 3.9 5.1 3.6 1.6 1.6 1.7 1.7 1.5 1.2-2.6 2.3 -0.8 -1.1 -1.0 -0.2 1.3 0.3 0.4 0.3 0.3 0.2 0.5 0.4 0.4 0.4 0.6 1.2 -0.6 -2.0 -0.6 -3.1 -1.0 0.4 1.7 2.3 1.3 1.3 1.3 1.4 1.5 1.7 1.6 1.8 1.5 0.9 0.4 -0.1 -0.1 -0.5 -0.5 -0.5 -0.8 -0.2 0.3 0.2 0.2 0.2

【Overseas economy and market data】

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 Real GDP (US)

(Annualized Qr/Qr rate,%) Real GDP (Euro zone)

(Annualized Qr/Qr rate,%) Real GDP (Asia) (Yr/Yr,%) 6.1 6.0 5.9 5.9 6.0 5.9 6.0 5.9 5.9 6.0 5.9 5.9 5.9 5.9 5.9 5.9

Real GDP (China) (Yr/Yr,%) 7.0 6.9 6.8 6.7 6.7 6.7 6.8 6.6 6.5 6.5 6.4 6.4 6.3 6.3 6.2 6.2 Yen/U.S.Dollar 121.3 122.2 121.5 115.4 108.2 102.4 109.3 112.5 111.3 112.0 112.6 113.2 113.8 114.4 115.0 114.4 Uncollateralized call rates (O/N) (%)* 0.067 0.075 0.076 0.034 -0.050 -0.046 -0.045 -0.048 -0.050 -0.050 -0.050 -0.050 -0.050 -0.050 0.000 0.000 TIBOR (3months) 0.169 0.161 0.166 0.124 0.068 0.058 0.053 0.059 0.060 0.060 0.060 0.060 0.060 0.060 0.100 0.200 Newly issued government bond yields (10years) (%) 0.40 0.39 0.31 0.06 -0.12 -0.13 -0.02 0.08 0.09 0.10 0.10 0.10 0.10 0.10 0.20 0.30 WTI future price (near month contract, US dollar/barrel) 57.9 46.4 42.2 33.5 45.6 44.9 49.3 52.9 54.0 54.9 55.3 56.7 57.6 58.2 58.8 59.4 Dubai crude oil prices (US dollar/barrel) 60.9 50.0 41.0 30.7 43.2 43.4 48.2 53.8 54.8 54.6 54.8 56.2 57.1 57.7 58.3 58.9 * actual=average, forecast=end of period

【External demand (export and import)】Yr/Yr、% Yr/Yr、%

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 Value of exports (Yen base) 6.7 3.7 -4.6 -7.9 -9.5 -10.2 -1.9 3.3 8.3 11.0 3.7 2.9 2.8 2.5 2.3 2.1

-0.6 -2.9 -4.1 -3.2 -1.3 1.0 4.7 4.6 4.4 4.3 0.6 0.4 0.8 0.8 0.7 0.7-3.1 -2.0 0.5 0.1 -0.0 0.3 3.9 0.5 -0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1

Value of imports (Yen base) -5.3 -5.9 -13.9 -15.7 -18.8 -19.5 -9.3 4.7 16.7 21.1 13.7 9.1 4.6 4.2 3.8 3.6-2.2 -1.9 -2.5 -0.8 -1.3 -0.7 1.6 2.2 3.0 3.1 1.0 1.6 1.6 1.4 1.1 1.3-0.3 -0.1 -1.2 0.5 -0.6 0.5 1.9 0.2 0.3 0.5 0.4 0.3 0.4 0.3 0.3 0.3

Balance (trillion yen) -0.3 -1.0 -0.1 0.3 1.5 1.0 1.3 0.1 0.3 -0.5 -0.4 -1.0 -0.0 -0.9 -0.7 -1.3 Current account balance (trillion yen)* 4.0 4.0 4.8 5.0 4.6 5.0 5.4 4.6 4.0 3.8 3.9 3.8 3.7 3.8 3.7 3.7

Balance on goods (trillion yen)* -0.4 -0.4 0.4 0.9 1.2 1.5 1.7 0.8 0.3 0.1 0.1 -0.1 -0.1 -0.1 -0.3 -0.4 Balance on service (trillion yen)* -0.5 -0.2 -0.3 -0.1 -0.4 -0.3 -0.2 -0.3 -0.3 -0.3 -0.3 -0.2 -0.2 -0.2 -0.2 -0.2 Balance on income (trillion yen)* 5.3 5.2 5.3 4.7 4.3 4.4 4.4 4.6 4.5 4.6 4.6 4.6 4.6 4.7 4.7 4.7

*seasonally adjusted

Economic Outlook (Quarterly)

FY 2018

FY 2015 FY 2016 FY 2017

FY 2017

2.1 2.1 2.8 2.6 0.9 0.8 1.4 3.5 1.9 2.2

FY 2018

FY 2018

2.7 2.7 2.7 2.7

1.5 1.5 1.5 1.4 1.4 1.4 1.4 1.5

FY 2017

Export of goods and services


GDP deflator　(Yr/Yr,%)

Nominal GDP

Real GDP

Private consumption

Housing investment

Private capital investment

Contribution of inventory investment　(Qr/Qr,%)

Government expenditure

Government final consumption expenditure

Public investment

FY 2015 FY 2016

1.2 1.8 1.9

2.6 2.0

1.4 1.5 1.1 2.0 2.0

Ammount (Yr/Yr,%）

Ammount (Qr/Qr,%)

Ammount (Yr/Yr,%）

Ammount (Qr/Qr,%)

FY 2015 FY 2016

forecast

forecast

forecast

18 / 18

This report is based on information believed to be reliable, but we do not guarantee its accuracy.

This report is intended only for information and should not be construed as solicitation to take any action such as purchasing/selling/investing financial market products. In taking any action, each reader is requested to act on the basis of his or her own judgment.

Use of this report is limited to "reproduction for personal use" or "quotation" as stipulated in the Copyright Law. For such use, please explicitly cite this report as the source of the information or quotation.

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【Corporations】Yr/Yr、%

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3(Qr/Qr, %) -1.3 -1.0 0.1 -1.0 0.2 1.3 2.0 1.2 -0.1 0.2 0.3 0.2 0.3 0.3 0.3 0.3(Yr/Yr, %) -0.8 -0.9 -0.8 -1.6 -1.8 0.4 2.1 4.1 4.6 3.4 1.6 0.6 1.0 1.1 1.1 1.2(Qr/Qr, %) 0.5 -0.5 -0.5 2.4 -1.3 -2.6 -3.1 0.5 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2(Yr/Yr, %) 3.9 2.0 0.0 1.8 0.0 -2.0 -4.6 -6.5 -4.9 -1.9 1.4 1.2 1.0 0.9 0.8 0.8

Sales 1.1 0.1 -2.7 -3.3 -3.5 -1.5 1.2 3.2 4.2 4.1 2.5 1.8 1.5 1.6 1.7 1.5 Ordinary profits 23.8 9.0 -1.7 -9.3 -10.0 11.5 3.6 9.7 4.3 -3.9 1.9 1.2 1.7 1.4 1.7 1.3

【Income and employment】Yr/Yr、%

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 Income per capita -0.7 0.6 0.2 0.7 0.6 0.5 0.2 0.3 0.4 0.2 0.3 0.1 0.3 0.3 0.5 0.3

0.3 0.2 0.3 0.4 -0.1 0.3 0.4 0.3 0.2 0.1 0.1 0.2 0.2 0.2 0.2 0.2-1.1 1.2 1.4 0.1 0.5 -1.7 -1.5 -0.1 -0.0 -0.3 -0.6 -0.6 0.3 0.5 0.4 0.5

Real wage indices -1.4 0.2 -0.1 0.5 1.1 1.2 -0.1 -0.5 -0.5 -0.8 -0.1 -0.4 -0.4 -0.4 -0.2 -0.3 Employee 0.7 0.7 1.0 1.5 1.6 1.5 1.6 1.1 1.0 0.8 0.7 0.7 0.7 0.7 0.6 0.5 Nominal compensation of employees* 0.5 1.4 1.7 2.6 2.2 2.3 2.0 1.7 1.8 1.3 1.3 1.2 1.4 1.4 1.4 1.1 Unemployment rate (%) 3.4 3.4 3.3 3.2 3.2 3.0 3.1 3.0 3.0 3.0 3.0 2.9 2.9 2.9 2.9 2.9※GDP base

【Goods prices】Yr/Yr、%

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 Domestic corporate goods prices -2.2 -3.7 -3.6 -3.7 -4.5 -3.8 -2.1 1.9 2.3 2.9 2.1 1.4 1.0 0.8 0.6 0.5

2.3 2.9 2.1 1.4 1.0 0.8 0.6 0.5 Consumer prices 0.6 0.1 0.2 0.0 -0.4 -0.5 0.3 0.6 0.8 0.8 0.2 0.5 0.6 0.6 0.6 0.5

0.8 0.8 0.2 0.5 0.6 0.6 0.6 0.5excluding freshfood 0.2 -0.2 -0.1 -0.1 -0.4 -0.5 -0.3 0.2 0.6 0.8 0.7 0.8 0.7 0.6 0.5 0.5

0.6 0.8 0.7 0.8 0.7 0.6 0.5 0.5

【 New housing starts】 annualized, ten thousand unitsYr/Yr、%

4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 94.4 91.5 88.2 94.4 99.1 98.0 95.3 94.2 92.8 91.1 89.5 88.2 87.7 87.1 87.1 88.0 7.6 6.2 -0.7 5.5 4.9 7.1 7.9 -0.2 -6.4 -7.0 -6.0 -6.4 -5.5 -4.4 -2.7 -0.2 29.0 28.6 27.3 29.0 29.6 29.7 28.6 29.7 29.7 29.5 29.3 29.1 28.9 28.8 28.7 29.4 2.2 4.8 0.2 1.7 2.1 3.9 4.6 2.4 0.2 -0.7 2.5 -2.1 -2.4 -2.3 -1.9 1.2 38.2 39.7 36.6 39.3 42.4 44.1 41.4 39.6 38.1 36.8 35.7 34.8 34.3 33.9 33.7 33.6 5.3 16.5 1.3 6.0 11.0 11.2 13.0 0.6 -10.2 -16.6 -13.8 -12.2 -10.0 -7.8 -5.4 -3.5 26.7 22.9 23.5 25.5 26.5 23.8 24.5 24.4 24.5 24.3 24.1 23.8 24.0 23.9 24.2 24.5 18.8 -5.4 -3.6 9.3 -0.5 3.6 3.8 -4.5 -7.2 1.8 -1.9 -2.5 -2.2 -1.8 0.3 2.8

FY 2018

FY 2018

FY 2018

0.4 0.4 0.5 0.4

FY 2018FY 2017

FY 2017

FY 2017

FY 2017

0.1 0.1 0.3 0.4

FY 2016

ScheduledNon-scheduled

FY 2015 FY 2016

FY 2015 FY 2016

FY 2015

Industrial production

Inventory index

excluding food (excluding alcoholic beverages) and energy




New housing starts

Owned

Rented

Built for Sale

0.0

FY 2015 FY 2016

0.6 0.7 0.6 0.6 0.2 0.10.5

forecast

forecast

forecast

forecast

outlook for the japanese economy in fiscal 2017 and fiscal ... · against a background of increases...

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