General

According to the Huacheng Import and Export Data Observation Report, the global inflation level continues to rise, driven by the rising prices of energy and other bulk commodities. In order to curb inflation, central banks of developed economies such as the Federal Reserve began to raise interest rates significantly. What followed was the concern that the economy would fall into contraction or even recession. It may become a common problem faced by the central banks of many developed economies that they may fall into the dilemma of not only being unable to control inflation but also increasing the risk of economic recession. From the current situation, the British economy has fallen into recession, while its inflation level is still rising, and Japan is also a developed economy facing similar situations. The difference is that the Bank of England continues to raise interest rates to fight inflation, while the Bank of Japan maintains loose monetary policy to boost the Japanese economy. The latest data showed that Japan's economy shrank in the third quarter, while Japan's inflation level continued to rise in October.

On the whole, the new round of New Coronary Pneumonia, sluggish domestic demand and the sharp depreciation of the yen were the main reasons for the drag on Japan's economic growth in the third quarter. Affected by the appreciation of the US dollar, the exchange rate of the yen against the US dollar fell rapidly in the past two months and fell below 150 in October. Therefore, the Japanese government once again intervened in foreign exchange 24 years after the Asian financial crisis. According to the data released by the Ministry of Finance of Japan, in order to support the yen exchange rate, the Japanese government spent 6.35 trillion yen to intervene in the foreign exchange market from September 29 to October 27, creating the largest intervention scale ever. Huacheng Import and Export Data Observation reported.

According to the data released by the Japanese Cabinet Office recently, the Japanese economy shrank in the third quarter, with GDP falling 0.3% month on month. According to the latest forecast of the Bank of Japan, Japan's economic growth is expected to be 2% in the 2022 fiscal year, lower than the previous forecast of 2.4%. By the 2023 fiscal year, Japan's economic growth is expected to be 1.9%, and will further decline to 1.5% by the 2024 fiscal year.

In order to promote Japan's economic recovery and ease the rapid depreciation of the yen, the Japanese government announced a new economic package earlier. Japanese Prime Minister Takeo Kishida said that the Japanese government would invest 29.1 trillion yen in the new economic stimulus plan. In addition to the public financial expenditure of local governments and the input of the private sector, the total size of the new economic package is expected to reach about 71.6 trillion yen.

According to the analysis of the Bank of China Research Institute, Japan's economy is expected to continue the weak recovery trend, and there are multiple factors that will restrict Japan's economic growth. First, the rebound of the epidemic situation has led to pressure on consumption and production. Second, the expected slowdown in global economic growth has made Japan face more external challenges. At present, the global economic environment is becoming bleak. The economic growth of major economies such as the United States and Europe has slowed down again and again. Under the pressure of rising raw material and energy costs and weak global market demand, Japan's industrial activity output and new orders have accelerated to decline. Third, the devaluation of the yen has aggravated Japan's economic contraction. Huacheng's import and export data observation report.

In the face of a weak economy, the Bank of Japan continued to support it by maintaining a loose monetary policy stance. However, it is worth noting that Japan is not only facing a decline in economic growth, but also enduring the pressure of continued upward inflation. In fact, over the years, the growth of prices and wages in Japan has been almost stagnant, and deflation pressure is a long-term problem facing Japan. However, since the beginning of this year, Japan's inflation rate has started to rise rapidly, which has been significantly higher than the Bank of Japan's inflation target of 2%.

According to the Huacheng Import and Export Data Observation Report, Japan's consumer price index (CPI) rose 3.7% year-on-year in October, exceeding the expected 3.6% and hitting the highest level since February 1982. Japan's core CPI in October, excluding fresh food, rose 3.6% year on year, higher than the expected 3.5%.

In fact, since April this year, Japan's CPI data has exceeded the Bank of Japan's monetary policy target of 2%, and has been above 2% for seven consecutive months. However, the current rise in inflation is not enough to persuade Bank of Japan Governor Kuroda to change his stance on loose monetary policy. Kuroda has repeatedly stressed that he will continue to firmly support the economy through continuous loose monetary policy.

In the view of the Bank of Japan, the current rise in Japan's inflation level may only be temporary. The Bank of Japan predicted that in fiscal year 2022, after excluding the price of fresh food, Japan's CPI would grow by 2.9%, higher than the previous forecast of 2.3%. By the 2023 fiscal year, this indicator will decline to 1.6%.

The minutes of the October monetary policy meeting released by the Bank of Japan show that it is appropriate for the Bank of Japan to continue to implement the current loose monetary policy in order to achieve the goal of price stability and wage increase. The Bank of Japan believes that although the range of price increases observed in this fiscal year is wider and the inflation rate may rise off the baseline scenario, it is still uncertain whether these increases can be sustained. If the enterprise forms a virtuous circle of prices and wages according to the current rising trend of prices and wages, it is possible to achieve the goal of price stability of 2% continuously and stably, Huacheng Import and Export Data Observation reported.