One month it’s good, the next it’s bad. The moderate slowdown in global economic growth and the strengthening of the Japanese yen (JPY) against the US dollar (USD) have participated in the drop around 14% in Japanese exports in July 2016, the most since 2009.
This tenth consecutive decrease concerns analysts who now directly question the viability of the ultra-accommodative monetary policy started by the bank of Japan (BOJ) years ago and completed with negative interest rates since January 2016. Recently praised by voters, Prime Minister Shinzo Abe has yet to reaffirm the relevance of his economic policy – Abenomics – while the political opposition has almost disappeared, stunned by its recent defeat.
Amid an ambivalent regional context where neighboring giant rival China is adapting gradually to the “new normal” while some new data, like in real estate market, is raising some concern, Japan is still struggling to revive its economic growth and inflation. Without any other solution presently, the BOJ whose balance sheet has grown exponentially may well be tempted to weaken the JPY again by starting yet another easing even if the issue seems more economic than strictly monetary.