On February 17th, Moody’s Analytics head of Japan economics Stefan Angrick spoke with CNBC Street Signs about why recent growth in Japan’s GDP numbers should be taken with a grain of salt given weak domestic demand due to inflation.
Related content: Japan core consumer prices in Jan. rise 3.2% on year on rice, energy (The Mainichi, February 21st, 2025.
Key Takeaways:
Growth or Illusion? Japan's GDP grew 0.1% in 2024, but only due to historical data revisions—without them, the economy would have shrunk.
A Warning Sign in Trade – Q4 growth came from net exports, but this was due to a 2.1% collapse in imports, revealing weak domestic demand.
Households Feeling the Squeeze – Inflation remains higher than expected, and real wages are falling behind, pushing economic recovery further out of reach.
Global Headwinds Ahead – Japan faces threats from China's slowdown, U.S. policy shifts, and looming tariffs on auto exports, all weighing on future GDP growth.
The Yen's Wild Ride – The currency has been swinging sharply between 151–155 per USD, reacting unpredictably to U.S. economic data.
Will the Bank of Japan Step In? – Rate hikes could strengthen the yen, but policymakers are caught between stubborn inflation and weak economic momentum.
