December BoJ hike: Japan’s trade and inflation data lend support – DBS

Japan’s real GDP is forecast to grow 0.8% in Q3, according to DBS Group Research. AI-driven exports and firmer wage-led consumption are expected to underpin the expansion. October trade figures are projected to show robust export growth alongside a widening deficit. Higher energy costs and a weak Japanese Yen are keeping inflation above 2%. Together, these developments should strengthen expectations of a 25bp rate increase by the Bank of Japan (BoJ) in December.

Growth and prices: Support for BOJ tightening

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"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. Find out more.)