Authors: Erika Yokoyama and Yoshiaki Nohara
Article: Original article
Publication date: Tuesday, November 15, 2022
Japan's economy shrank in the third quarter, with a historic fall in the yen undermining growth momentum. The country's post-pandemic recovery remains vulnerable amid growing concerns of a global contraction.
Harumi Taguchi, chief economist at S&P Global Market Intelligence, said the yen's rapid fall has an adverse effect on firms, hit by higher import costs. However, companies are also not able to shift increased expenses to exports given the economic slowdown.
The government proceeded to intervene in the markets in October, pushing its spending to $65 billion. The currency’s slide has been triggered by a divergence between the Bank of Japan's low interest rates and the U.S. skyrocketing borrowing costs.
The BoJ stands for the economy’s constant support. The regulator noted that inflationary pressures imply sustained wage growth in order to make prices steady.
Forecast: Further strengthening of the Japanese yen to restore economic growth stimulus.
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