Japan

RGE's Q3 2010 Japan Outlook

RGE and all institutional reports reviewed here forecast a modest recovery in 2010, powered by exports to Asia. None of these reports, however, holds much hope that 2010 will bear more than a cyclical rebound within a multi-year period of structural decline due to Japan's aging population, capital supply overhang and need for fiscal reform. The range of growth forecasts shifted upward from 0.5-3.1% in April 2010 to 1.5-3.1% in June, with the divergence based on the degree of strength imputed to the recovery in domestic demand.

RGE stands on the bearish side of the range, believing private investment and public works spending will contract and consumption will stumble amid a jobless recovery. Meanwhile, those on the bullish side believe capital expenditure has bottomed and consumer spending will revive thanks to fiscal stimulus measures and falling unemployment.

Read the Q3 2010 Japan Outlook