JDFN Financial Network

The Japanese economy threaten by the continues deflation risks with a continuing decline in prices which increases the pressure on the BOJ to combat the decline in the inflationary rates which affect negatively on the economic recovery for the second largest global economy.

The Japanese economic has announced today the consumer price index during January which fall by %1.3 compared with the pervious decrease by %1.7 and the expectations was leading to a decrease with %1.4, while the core index decreased with %1.2 which is the same value of both of expectations and previous reading.

Expectations indicates to the continues decreasing in prices in the Japanese economic till the economic recovery focus on the household sector, as the demand decreasing by the Japanese consumer the prices will decreased by force which decreasing the inflation rate which negatively affect on the economic recovery on the Japanese economic.

The BOJ tries to support the economic growth by keeping the interest rate at the lowest level of %0.10 besides working on fighting the deflation risks, at the same time the Japanese government and BOJ pumping massive liquidity in the financial markets in order to increase the money supply to spur rise of inflation rate.

Also the Japanese Economy announced the industrial production index of January which increased by %2.5 compared to the previous increases by %1.9 while the expectations was increasing by %1.0, But the annual index has increased by %18.2 compared to previous raise by %5.1 while the expectations increases to be %16.5.

The ongoing improvements in the industrial sector reflects the improvement in the global demand after the stimulus plans which made by the global governments which reached 2.2 trillion dollar in order to improve the credit markets and to raise the global demand for exports which led the Japanese industrial sector to improve because Japan relies mainly on exports

The Retail trade index of January showed increase by %2.9 compared to previous fall by %1.2 and the expectation was to rise with %0.3, while the annual index raises by %2.6 compared with a previous fall by %0.3 and the forecast led to decrease by %0.2.

Although the Japanese retail sales improvement, the household sector still suffers from a lack of confidence in Japanese economic due to employment weakness and incomes falling significantly, thus the Japanese economy will issue the unemployment rate on the next week which may reflects the real situation for the household sector.

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