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Japan in the World
The global economy as the pandemic endgame approaches
January 2022
Japan in the World The global economy as the pandemic endgame approaches
1 | |
2 | |
3 | |
Reopening of economies looks set to ease supply constraints | 4 |
Low probability of financial disequilibrium | 5 |
A risk of greenflation | 6 |
Risk of asymmetric reopening of economies | 7 |
Japan enters the reopening phase | 8 |
Significant job losses have been avoided in Japan | 9 |
Subdued wage growth remains unchanged | 10 |
Disadvantages of a cheaper Japan | 11 |
To reboot Japan's potential growth rate | 12 |
Green and digital will drive structural reform in Japan | 13 |
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Approaching the pandemic endgame
Deviation of real GDP level from past trend (2010-19)
(%)
4.0
2021 2022
2.0
0.0 | |||||||||
-2.0 | |||||||||
-4.0 | |||||||||
-6.0 | |||||||||
-8.0 | World | economies Advanced | States United | Japan | area Euro | and market Emerging economies developing | China | India | 5-ASEAN |
Note: To estimate GDP deviation from the trend in 2021 and 2022, we measures the projected real GDP level based on IMF forecasts.
Source: Nomura, based on IMF data
Having faced repeated surges in infection, progress in vaccination has started to lead the global economy to the eventual endgame of COVID-19.
Despite differences in timing and degree of recovery among advanced and emerging economies, the world economy will more or less return to the pre-COVID growth trend in 2022.
2
Accelerated inflation due to supply constraints
Core consumer price inflation rate in major developed economies
(y-o-y, %) | |||||||||||
5.0 | Eurozone | ||||||||||
4.0 | Japan | ||||||||||
US | |||||||||||
UK | |||||||||||
3.0 | |||||||||||
2.0 | |||||||||||
1.0 | |||||||||||
0.0 | |||||||||||
-1.0 | |||||||||||
-2.0 | |||||||||||
-3.0 | |||||||||||
00 | 02 | 04 | 06 | 08 | 10 | 12 | 14 | 16 | 18 | 20 | (CY) |
At the same time, we are facing a sort of growing pain ahead of the endgame.
The production of various durable goods, the demand for which surged during the pandemic as stay at home and work from home became common, now suffers supply constraints for intermediate parts including semiconductor chips.
Mismatches in supply and demand caused by supply constraints are leading accelerated inflation, driven by elevated international commodities prices.
Note: Definition of 'core' depends on particulars for each economy. Japan's core inflation includes impacts of consumption tax hikes and free education policy.
Source: Nomura, based on Haver Analytics data
3
Emerging concerns of economic slowdown in China
China's official manufacturing PMI and Credit Impulse Index
Concern for the Chinese economy is casting
(y-o-y, %) | Credit impulse index (LHA) | (DI) | a shadow over the global economy heading | ||||||
20.0 | 58.0 | ||||||||
Official manufacturing PMI (RHA) | toward reopening. | ||||||||
56.0 | Besides the deceleration of production | ||||||||
15.0 | |||||||||
54.0 | activities due to supply constraints, 'Common | ||||||||
Prosperity' policy enacted by the Xi Jinping | |||||||||
10.0 | 52.0 | administration is involving various tightening | |||||||
50.0 | and controlling measures on economic | ||||||||
5.0 | activities. | ||||||||
48.0 | |||||||||
0.0 | 46.0 | ||||||||
44.0 | |||||||||
-5.0 | |||||||||
42.0 | |||||||||
-10.0 | 40.0 | ||||||||
05 | 07 | 09 | 11 | 13 | 15 | 17 | 19 | 21 (CY) |
Source: Nomura, based on Haver Analytics data
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Nomura Holdings Inc. published this content on 05 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 January 2022 08:07:06 UTC.