Japan: Trade and inflation data back December BoJ hike – DBS

DBS Group Research forecasts Japan’s real GDP to grow 0.8% in Q3, supported by AI-driven exports and stronger wage-led consumption. October trade data are expected to show solid export growth but a wider deficit, while inflation stays above 2% on higher energy costs and a weak Japanese Yen. These trends should reinforce expectations for a 25bp Bank of Japan (BoJ) rate hike in December.

Growth and prices justify BOJ tightening

"Real GDP is expected to expand by 0.8% qoq saar in 3Q, broadly in line with trend."

"October trade data are likely to show export growth remaining solid at 17% yoy, but the trade deficit widening to JPY1.2tn."

"Overall, these data should reinforce the case for a 25bp BOJ rate hike at the December policy meeting, with growth around trend, inflation above target, and continued pressure on external balance/exchange rate."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)