Why You Should Not Be “Fooled” by Japan’s Q1 2017 GDP Figure

Originally published by Japan Times on May 24, 2017 Read the original article.

The August 2016 Elliott Wave Financial Forecast said:

With its economy stalling, again, late last month Japan promised further stimulus measures. Much to the dismay of stimulus addicts, however, Japan stopped short of a helicopter-money drop. “If history is any guide,” says Bloomberg, “this stimulus will just pile up more debt without really boosting long-term growth.” That’s exactly the point that Conquer the Crash, The Elliott Wave Theorist and the Elliott Wave Financial Forecast have been making.

Indeed, read this excerpt from a May 24, 2017 Forbes article titled “The Danger Of Deflation Still Looms Over Japan”:

According to Japan’s GDP figure for the first quarter of 2017 (released on May 18), the Japanese economy has grown by an annualized real rate of 2.2%. Most welcome this as the country’s longest economic expansion in 11 years.

Don’t be fooled by this figure.

It is actually a warning sign for Japan’s policymakers. Why? Because the nominal GDP has been shrinking slightly. The gap between growing real GDP and slightly shrinking nominal GDP is, of course, deflation. GDP deflator has declined by 0.6%.

Why do we see this apparent return of deflation? The usual suspect is fiscal policy, or lack thereof. Government expenditure grew in 2013, but declined afterward. And raising the consumption tax in 2014 … also played a large factor.

You can read the entire article by following the link below:

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