Economic Activity, Prices,
and Monetary Policy in Japan
Speech at a Meeting with Business Leaders in Hakodate
Goushi Kataoka
Member of the Policy Board
I. Economic Activity and Prices
A. Overseas Economies
I would like to start my speech by looking at developments in overseas economies.
With the growth pace of the global economy slowing since the second half of 2018,
differences in growth rates among countries are evident, and some risk factors have started
to materialize. According to the July 2019 World Economic Outlook (WEO) Update
released by the International Monetary Fund (IMF), as presented in Chart 1, the global
economic growth rate is projected to decelerate to 3.2 percent in 2019, picking up to 3.5
percent in 2020. However, downward revisions from the April 2018 WEO forecasts are
evident, as seen on the side of Chart 1. As for the global Purchasing Managers'
right-hand
Index
(PMI), shown in Chart 2, the index for manufacturing has been below the neutral
50-point level for two consecutive months, marking the lowest level since October 2012,
when the global economy faced the European sovereign debt crisis. The index for services
Given
is on a moderate declining trend, although it is still above the 50-point level. these
facts, I suppose there is a growing possibility that the recovery in the global economy,
which was expected to start from the second half of 2019, may be delayed, and the degree
may be limited. There are three specific key factors behind my thoughts: (1) the heightening
of economic policy uncertainty; (2) developments in the U.S.-China trade friction and their
effects; and (3) the outlook for the world semiconductor market.
With regard to the first Chart 3 presents the rate of change in global
factor, year-on-year
production and the Global Economic Policy Uncertainty Index,
which shows the
levels for 20 major countries. The
GDP-weighted average of economic policy uncertainty
pace of increase in global production is decelerating while uncertainty over economic
policy conducted by each country is heightening.
The second factor is developments in which is particularly
the U.S.-China trade friction,
crucial among various Chart 4 shows the impact of the trade
economic policy uncertainties.
friction on GDP for the United States and China, estimated by the IMF in June 2019. The
bar graph represents the deviations from baseline projections of the real GDP
left-hand
levels for the two countries. The simulations take into account the tariff hike from 10
percent to 25 percent on 200 billion dollars' worth of U.S. imports from China as of May 8,
2019, and assume an envisaged 25 percent tariff on the remaining U.S. imports from China
as well as retaliation by China. Although the impact differs between the two countries in the
short run, the trade friction will equally exert downward pressure on real GDP in both
countries by around 0.4 percent in the long run. The right-hand chart shows the impact of
the trade friction on the global economy. The tariff hikes implemented in 2018 are exerting
downward pressure on global real GDP for 2019 by more than 0.2 percent. If the 25 percent
tariff is imposed on almost all items imported from China, it is estimated that the global real
GDP figures for 2019 and 2020 will be pushed down by around 0.4 percent and 0.5 percent,
respectively. The United States recently announced that it will impose additional tariffs on
the remaining imports, worth approximately 300 billion dollars, and will raise tariffs by 5
percentage points on the U.S. imports from China that already have been taxed. As trade
negotiations have not come to a conclusion, attention should continue to be paid to the fact
that the global economy still faces downside risks.
The third factor is the outlook for the world semiconductor market. Deceleration in world
semiconductor sales became notable from mid-2018. Various reasons have been pointed out
a halt in expansion of demand for data centers, a
as the background to this; for example,
prolonged replacement cycle for smartphones, and
a decline in business fixed investment
related to machine tools -- which largely are equipped with semiconductors -- due mainly to
deterioration in the U.S.-China trade friction. The left-hand side of Chart 5 compares the
forecasts for the year-on-year growth rate in the semiconductor market made by the World
Semiconductor Trade Statistics Inc. in autumn 2018 and spring 2019 by region. The
forecasted market growth rate for 2019 has been revised sharply downward in the spring
2019 forecast, from a slight increase in the autumn 2018 forecast, especially for the U.S.
market. The right-hand chart shows the year-on-year rate of change in world semiconductor
shipments. As the pace of increase in shipments was fast over the past two years, recovery
in the semiconductor market likely will take time.
B. Japan's Economy
Next, I would like to turn to Japan's economy, starting with recent developments.
In Chart 6, the line graph shows developments in the real GDP growth rate and the bar
graph shows the contribution of each component to GDP. The growth rate for the
July-September quarter of 2018 registered negative growth, due mainly to the effects of
subsequently
natural disasters, but has been positive for three consecutive quarters through
the April-June quarter of 2019. In that quarter, the contribution of exports remained small,
reflecting the slowdown in the global economy, but the contribution of domestic demand
turned positive due to an increase in the contribution of private consumption, business fixed
had
investment, and government spending, which decreased in the previous quarter. Overall,
the increase in domestic demand more than offset the decrease in external demand in the
April-June quarter.
Turning to the outlook for Japan's economy, as shown in Chart 7, the medians of forecasts
made by the Bank of Japan's Policy Board members for real GDP growth rates presented in
the July 2019 Outlook for Economic Activity and Prices (Outlook Report) are 0.7 percent
for fiscal 2019, 0.9 percent for fiscal 2020, and 1.1 percent for fiscal 2021. The Bank's
baseline scenario is that, although external demand is likely to be somewhat weak for the
time being, it gradually will increase thereafter, and with the firm domestic demand, the
economy is likely to continue on an expanding trend. However,
my projection for fiscal
2019-2021 is around 0.5 percent to 1.0 percent, which is slightly below the potential growth
am of the
rate. I also view that risks to economic activity are tilted to the downside. As
background to my projection, I consider that an important factor is how the deterioration in
external demand will affect domestic demand. In the following, I will explain my views on
exports, business fixed investment, and private consumption.
First, real exports turned to a decline in the quarter of 2019 and experienced
January-March
weak recovery in the following quarter, as seen in Chart 8. The key to the outlook is
developments in the trade friction and the degree of recovery in the
U.S.-China
semiconductor market, and I believe that real exports are highly likely to remain sluggish
for the time being.
Second,
business fixed investment has been on an uptrend, with insufficient capacity -- as
shown in Chart 9 -- continuing to exert upward pressure on investment. However, according
Tankan
to the Bank's (Short-Term Economic Survey of Enterprises in Japan), the diffusion
index (DI) for production capacity has been approaching the turning point between
insufficient and excessive capacity since the turn of 2019, and my view is that the
increasing trend in business fixed investment may come to a halt. Business fixed investment
Tankan
plans in the June 2019 were firm on the whole, both in manufacturing and
within
nonmanufacturing. As shown in Chart 10, however, manufacturing, investment plans
of the processing industries, which are highly dependent on exports -- such as the
general-purpose, production, and business oriented machinery, as well as the motor vehicles
industries -- were below the past average. In particular, investment plans of the
general-purpose, production, and business oriented machinery industries were revised
downward in the June survey from the March survey. The recent growth in the plans of
overall manufacturing is driven by the basic materials industry, but considering the past
the
average of revision patterns in the Tankan, the investment plans of basic materials
industry also may be revised downward. Furthermore, as for nonmanufacturing, shown in
Chart 11, investment plans of the construction as well as the wholesaling and retailing
at
industries were about the same levels as the past average, but those of the information
communication industry were relatively weak. Thus, although business fixed investment
think
plans are firm on the whole, I that those of manufacturing are being steadily
influenced by the slowdown in overseas economies.
Lastly, private consumption has been on a moderate increasing trend, driven by
consumption of durable goods and services, as presented in Chart 12. This reflects the
sustained favorable employment. However, there have been signs of changes in the labor
market since the turn of 2019. For example, the employment-related level DI in the
Economy Watchers Survey
is at a level very close to falling below the neutral point of 50,
and the number of active job openings has decreased for five consecutive months on a
year-on-year basis. As Chart 13 indicates, developments in consumption have been
moderate so far, although the consumption tax hike is coming up in October 2019, and I
in
assume that consumer sentiment has deteriorated more than the second half of fiscal 2013,
half a year before the previous tax hike. It is difficult to predict how the measures to reduce
the household burden of the tax hike will affect consumption, and thus attention should be
paid to future developments in consumption, including the effects of the tax hike.1
C. Recent Developments and Outlook for Prices
Next, I will move on to price developments.
As indicated in the side of Chart 14, the rates of increase in the
left-hand year-on-year
consumer price index (CPI) for July 2019 both for all items less fresh food and for all items
less fresh food and energy were 0.6 percent. Looking at side of Chart 14,
the right-hand
which shows indicators that represent the underlying developments in consumer
prices,
items for which prices have risen outnumber those for which prices have declined, and the
difference between the two figures has been widening slightly since the turn of 2019.
However, the rises in trimmed mean and weighted median have come to a halt, and it can be
said that price rises have not spread to goods that have a high share in consumption.
Next, I will take a look at developments in the output gap and to
medium- long-term
inflation expectations, which are indicators that influence underlying price developments.
The output gap, as shown in the side of Chart 15, has remained positive, reflecting
left-hand
improvements in the capital stock and labor markets. Recently, however, it seems that it is
no longer on an expanding trend. Inflation expectations have been somewhat weak, as
1
The 2019 Salaried Worker Pocket Money Survey released by Shinsei Bank shows the results of a
of
survey conducted 2,700 workers, both male and female, aged 20 through 59 years. The
a
respondents were asked "If the consumption tax is raised to 10 percent, will it be burden on your
pocket money?" For both men and women, the proportion of respondents who answered that the 10
that
percent tax "will be a great burden" was higher than of those who answered that the current 8
percent tax "is a great burden." The proportion of those who answered that the 10 percent tax hike
"will be a burden" (comprising the choices "will be a great burden" and "will slightly be a burden")
that
was higher by more than 10 percentage points than of those with the same answers for the
current 8 percent tax. Furthermore, Hakuhodo Inc. revealed in its survey that 71.3 percent of
respondents answered that the 10 percent tax hike "will be a heavier burden compared with the
in
previous tax hike." The ratio was higher particular for women aged 20 through 49 years. For
details, see "Shōhi zei taisaku kenkyū purojekuto chōsa: Zōzei zen go no ishiki-kōdō," Hakuhodo
Inc., June 2019.
in
Taking account of the difficulties projecting developments in consumption after the tax
hike and of the time lag in releasing statistics, I consider that it has become more necessary than at
the time of the previous tax hike to enhance analysis of real-time data.
indicated in the side of Chart 15. I am convinced that this is attributable to the
right-hand
adverse effects of prolonged deflation in the past and to recent weak price developments. In
addition, in my view, the credibility of achieving the Bank's 2 percent price stability target
has not been sufficiently enhanced among the public, and this also is affecting inflation
expectations.
Turning to the outlook for prices, the medians of the Policy Board members' forecasts for
the rate of change in the CPI (all items less fresh food) presented in the July
year-on-year
2019 Outlook Report are 0.8 percent for fiscal 2019, 1.2 percent for fiscal 2020, and 1.6
percent for fiscal 2021, excluding the effects of the scheduled consumption tax hike and
policies concerning the provision of free education (Chart 7). The Bank's view is that the
momentum toward the 2 percent price stability target will be maintained. It cannot be
judged, however, that the inflation rate will accelerate toward 2 percent, and thus I dissented
from the relevant description in the July Outlook Report.
There are four main reasons behind my position. First, a widening of the output gap is less
likely to lead to a rise in inflation rates. Second, it takes some time for the adaptive
formation mechanism to bring about an increase in inflation expectations and then lead to
price rises.2 Third, in a situation where the monetary policy is unchanged amid successive
downward revisions to the Bank's outlook for prices, it is unlikely that inflation
expectations will rise in a manner through an enhancement of the
forward-looking
credibility that the price stability target will be achieved. Fourth, while overseas central
banks are strengthening their monetary easing stance, the risk that circumstances
surrounding Japan's prices are becoming more adverse, mainly through foreign exchange
rates, is heightening.
II. Conduct of Monetary Policy
Let me first outline the Bank's current monetary policy, based on the outlook for economic
activity and prices that I have described. I would then like to express my opinion about the
Bank's monetary policy conduct.
The Bank conducts monetary policy under the framework of Quantitative and Qualitative
Monetary Easing (QQE) with Yield Curve Control, aiming to achieve the 2 percent price
stability target. This current framework consists of three major components (Chart 16).
The first is yield curve control, in which the Bank the policy interest rate at
sets short-term
minus 0.1 percent and the operating target for interest rates at around 0 percent.
long-term
interest rates, the Bank purchases Japanese government bonds (JGBs)
As for long-term
while allowing some degree of fluctuation in yields, depending mainly on
long-term
developments in economic activity and prices.
The second component is the purchase of risk assets, including funds
exchange-traded
(ETFs). The Bank purchases ETFs so that their amount outstanding will increase at an
annual pace of about 6 trillion yen. With a view to lowering risk premia of asset prices in an
appropriate manner, the Bank may increase or decrease the amount of purchases depending
on market conditions.
The third component is the Bank's public commitment regarding the future conduct of
monetary policy. In April 2019, the Bank clarified forward guidance for policy rates, stating
that it "intends to maintain the current extremely low levels of and interest
short- long-term
rates for an extended period of time, at least through around spring 2020, taking into
account uncertainties regarding economic activity and prices including developments in
overseas economies and the effects of the scheduled consumption tax hike." The Bank aims
to strengthen market confidence and expectations regarding the sustainability of monetary
easing by making a commitment to the levels of future policy interest rates and the duration
for maintaining low interest rates, in addition to the commitment
inflation-overshooting
regarding the monetary base.
Of these three components, I dissented from two: yield curve control and the Bank's
commitment regarding the future conduct of monetary policy. As presented in the joint
statement by the Bank and the government, the Bank's mission is to achieve the price
stability target at the earliest possible time. With this in mind, as for yield curve control,
I
judged it necessary to strengthen monetary easing in the situation where the observed
inflation rate was still evidently far from the 2 percent Based on such
price stability target.
recognition, I pointed out that it was appropriate for the Bank to revise the forward
guidance for the policy rates to relate it to the price stability target,
in addition to
encouraging a further widening of the output gap within positive territory through
3
Moreover, to overcome deflation completely amid heightening
additional easing.
uncertainties regarding economic and price developments, I considered it important to
influence the expectations and forecasts of market participants as well as firms and
households by implementing the appropriate means to further coordinate fiscal and
monetary policy.4
At the July 2019 Monetary Policy Meeting, a new sentence was added at the end of the
Statement on Monetary Policy: "In particular, in a situation where downside risks to
economic activity and prices, mainly regarding developments in overseas economies, are
significant, the Bank will not hesitate to take additional easing measures if there is a greater
possibility that the momentum toward achieving the price stability target will be lost." Amid
increasing downside risks to economic activity and prices, and in the aforementioned
3
Bearing in mind the current yield curve, which has flattened, I think that it is appropriate to
conduct yield curve control so that its shape becomes more accommodative by setting a greater
negative value for the short-term policy interest rate.
the event that
In the price stability target cannot be achieved through around spring 2020,
which is the time frame given in the current forward guidance, it may need to be extended. In my
opinion, it is not favorable for the Bank to make such changes repeatedly, as there is concern that
public confidence regarding monetary policy could deteriorate. I consider it appropriate for the Bank
to revise the forward guidance for the policy rates to relate it to the price stability target.
4
I would argue that the mindset of firms and households in Japan was formed under the prolonged
deflationary environment after the mid-1990s, such that it has become rational to assume that
economic activity is sustainable without inflation. In a situation where the anchor of inflation
expectations has been lost, I believe that to achieve the 2 percent price stability target and maintain
the target price level in a stable manner, it is important not only to enhance monetary easing, but also
to further strengthen the coordination of fiscal and monetary policy -- that is, a "policy mix."
current situation where the observed inflation rate is still evidently far from the 2 percent
price stability target, it is important to make a preemptive policy response, not after
confirming changes in the inflation rate which is a lagging indicator of economic conditions.
overcoming deflation completely.
The Bank will continue to make efforts toward
III. Changes in Japan's Labor Market
Next, I would like to talk about Japan's labor market.
As shown in Chart 17, Japan's unemployment rate continued to rise throughout the 1990s
and it
until 2002, when it marked 5.5 percent; then declined to the 3 percent level but rose
has dropped
again following the failure of Lehman Brothers, and to the range of 2.0-2.5
percent recently.5 Despite such improvement in labor market conditions, the growth in
wages and prices has been sluggish. As the background to this, various factors have been
cited; for example, low wages of the "employment ice-age" generation, possible effects of
the upward wage rigidity, the increasing share of part-time employees, and subdued
demands by labor unions for wage increases.6 Some of these factors are based on the
assumption that labor market conditions already have been tight. I now would like to review
5
the
To explain the rise in unemployment rate since the 1990s, researchers have conducted factor
decomposition, concluded that a shortage in demand and structural changes in the labor market
then
contributed to the rise, and estimated the contribution. My estimation of the structural
unemployment rate that measures structural changes in the labor market was in the range of 2.5-3.0
percent, as in Kataoka Goushi, "Kōzō shitsugyō ritsu suitei hōhō no ayamari," chap. 11 in
Abenomikusu wa shinkasuru: Kin'yu ganseki riron o tou, ed. Harada Yutaka, Kataoka Goushi, and
Yoshimatsu Takashi (Tokyo: Chuokeizai-sha, 2017). Recently, however, while the unemployment
rate remains in the range of 2.0-2.5 percent, the pace of increase in wages has not accelerated. In
estimating the structural unemployment rate, it is necessary to consider changes in demographics,
and
the expansion in the labor force participation of seniors and women, estimation methods and
errors.
6
See Genda Yuji, ed., Hitode busoku na noni naze chingin ga agaranai no ka (Tokyo: Keio
University Press, 2017). Ozaki and Genda (2019) analyzed the reason why wages had not shown a
sharp increase by using the latest data, and concluded that wages, particularly of women, were likely
to rise rapidly if the expansion of labor supply ended and the labor market for non-regular employees
reached the Lewisian Turning Point. See Ozaki Tatsuya and Genda Yuji, "Chingin jyōshō ga yokusei
sareru mekanizumu," Bank of Japan Working Paper Series, no. 19-J-6, July 2019,
https://www.boj.or.jp/research/wps_rev/wps_2019/data/wp19j06.pdf.
so as to have reached a
whether the current labor market conditions are tight level that can
encourage rises in wages and prices.
the the
In addition to unemployment rate, Chart 17 shows developments in labor force
participation rate, which is the ratio of persons who want to work (labor force) among those
in years
the population aged 15 and over. The rate continued to decline from around 2000,
bottomed out around end-2012, and has been rising since then. In October 1992, when the
unemployment rate was 2.2 percent, the same level as in July 2019, the labor force
participation rate was 64.2 percent, which is about 2 percentage points higher than that of
now
July 2019. This implies the possibility that the labor market conditions are less tight
advance the
than in 1992. Needless to say, the in the aging of population and the decline in
the
birthrate have exerted downward pressure on the labor force participation rate from
1992 to the present, and we should exclude such effects from our observations.
Chart 18 indicates the results of the decomposition of factors that contributed to the overall
change in the labor force participation rate from October 1992 to date. The demographic
the
factor has pushed down the overall rate by a large margin with the aging of population.
On the other hand, the increase in the contributions of women (aged between 15 and 59
years) and of the elderly (men and women aged 60 years and over) gradually have pushed
but
up the overall rate. Their positive contributions remained small until around end-2012
seen particular
have acceleration since then, substantially offsetting the negative
contribution of the demographic factor. Firms' growing demand for labor, backed by the
economic expansion, has encouraged those who had chosen not to work, mainly women and
seniors, to join the labor force and has increased the number of workers, thereby causing the
unemployment rate to decline. Nevertheless, the labor force participation rate of men (aged
between 15 and 59 years) has not recovered to the level before the "lost two decades," and
this may be a reason why labor market conditions are not tight enough to push prices
upward.7
Ministry of
In order to better grasp the employment situation from various aspects, the
Internal Affairs and Communications started to include items related to labor
underutilization and collected data from January 2018 in the Labour Force Survey, in
addition to the previously compiled labor force status; that is, employed persons,
unemployed persons, and persons not in the labor force.8 As shown in the side
right-hand
of Chart 19, labor underutilization consists of (1) "persons in
time-related
underemployment," which are employees who wish to work longer hours or
part-time
including those who currently are working short hours due to employers'
full-time,
circumstances, such as the need to make production adjustments, (2) "unemployed persons,"
which are persons who have been seeking jobs within the previous one month and are ready
to work as soon as a job becomes available, and (3) "potential labor force," which is
comprised of those categorized neither as employed nor unemployed in the Labour Force
Survey, potentially able to work because they are willing to do so, but did not seek jobs. The
side of Chart 19 shows the ratio of such labor underutilization to the overall labor
left-hand
force including the potential labor force. This chart indicates that there is still room for a
further decrease in unemployed male workers, as well as a further increase in working hours
of female workers accomplished through such means as changing their employment status
and environment.
7
Nakagawa (2018) pointed out that a decline in the men's labor force participation rate pushed
down the overall rate for 2017 by 0.6 percentage point compared with that for 1994, when the
unemployment rate was about the same level as 2017. She then stated that about 700,000 additional
workers would be needed to fill this gap. Considering the slack in labor supply of men, the
level
unemployment rate that can encourage rises in wages and prices was assumed to be about 2
See Nakagawa Ai, "Rōdō jyukyū ga hippaku shitemo chingin to bukka ga agaranai no wa
percent.
naze ka," chap. 2 in Abenomikusu no shinka, ed. Harada Yutaka and Masujima Minoru (Tokyo:
Chuokeizai-sha, 2018).
8
Rōdō ryoku
For details, see Statistics Bureau, Ministry of Internal Affairs and Communications,
chōsa mikatsuyō rōdō shihyō no kaisetsu. An
English translation of the summary is available in
Revisions of the Labour Force Survey from January 2018, March 2018.
In sum, the
labor market conditions will tighten further and wages and prices will rise if
following conditions are met: a rise in men's labor force participation rate, a decline in
an
men's unemployment rate, and increase in women's working hours. As I mentioned
earlier, some signs of weakness have been observed in the labor market recently.
Accelerating the pace of growth in aggregate demand is the key to preventing negative
effects from spreading to the whole labor market.
Economic Activity, Prices,
and Monetary Policy in Japan
Speech at a Meeting with Business Leaders in Hakodate
September 4, 2019
Goushi Kataoka
Chart 1
World Economic Outlook by the IMF
July 2019 forecasts Difference from April 2018
(y/y % chg.) forecasts (% pts.)
2018 2019 2020 2018 2019 2020
World
3.6 3.2 3.5
-0.3 -0.7 -0.3
Japan
0.8 0.9 0.4
-0.4 0.0 0.1
United States
2.9 2.6 1.9
0.0 -0.1 0.0
Euro Area
1.9 1.3 1.6
-0.5 -0.7 -0.1
Germany
1.4 0.7 1.7
-1.1 -1.3 0.2
Advanced
Economies
France
1.7 1.3 1.4
-0.4 -0.7 -0.4
United Kingdom
1.4 1.3 1.4
-0.2 -0.2 -0.1
China
6.6 6.2 6.0
0.0 -0.2 -0.3
Brazil
1.1 0.8 2.4
-1.2 -1.7 0.2
India
6.8 7.0 7.2
-0.6 -0.8 -0.7
Emerging
Economies
Russia
2.3 1.2 1.9
0.6 -0.3 0.4
Chart 2
Global PMI
DI, % pts.
60
Global Manufacturing PMI Output Index
Global Services PMI Business Activity Index
55
50
45
12 13 14 15 16 17 18 19
CY 2012 13 14 15 16 17 18 19
Chart 3
Global Production and
Economic Policy Uncertainty
y/y % chg.
average from 1997 to 2015 = 100
15 350
Global Economic Policy Uncertainty Index (right scale)
World industrial production (excl. constructions)
300
10
250
Uncertainty
5
intensifies
200
0
150
-5
100
-10
50
-15 0
CY 05 2005 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Notes: 1. World industrial production is a weighted average of industrial production volume for each country. The latest figure is as of June 2019.
2. Global Economic Policy Uncertainty Index is a GDP-weighted average for 20 major countries including the United States, China, Japan,
and European countries. The latest figure is as of July 2019.
Sources: Economic Policy Uncertainty, "Global Economic Policy Uncertainty Index"; CPB Netherlands Bureau for Economic Policy Analysis,
"Industrial Production Volume, CPB World Trade Monitor."
Chart 4
Effects of the U.S.-China Trade Friction
(Estimates by the IMF)
Impact on Global Real GDP
Impact on Real GDP of the U.S. and China
Notes: 1. The left-hand graph indicates the marginal (i.e. additional) impact on the level of GDP from the announced and envisaged tariffs between
the United States and China. The figures are the deviations from baseline projections in percentage terms. Announced tariffs correspond
to an increase in tariffs from 10 percent to 25 percent on USD 200 billion of U.S. imports from China as of May 2019. Envisaged tariffs are
the possible 25 percent tariff on the roughly USD 267 billion of U.S. imports from China. The simulations assume retaliation by China.
2. The right-hand graph shows the marginal effect on global GDP of the tariffs that were implemented in 2018 as well as the tariffs that were
announced and envisaged in May 2019. The figures are the deviations from baseline projections in percentage terms.
Source: IMF, "G20 Surveillance Note (June 8-9, 2019)."
Chart 5
World Semiconductor Market Forecasts
World Semiconductor Market
World Semiconductor Shipments
Forecasts by Country/Region
y/y % chg.
30
Forecasts made in autumn 2018
1.4
U.S.
Forecasts made in spring 2019
20
-23.6
Forecasts made in autumn 2018
1.9
10
Europe
Forecasts made in spring 2019
-3.1
Forecasts made in autumn 2018
2.5
0
Japan
Forecasts made in spring 2019
-9.7
-10
Forecasts made in autumn 2018
3.1
Asia
Forecasts made in spring 2019
-9.6
-20
-30 0 30
CY 13 2013 14 15 16 17 18 19
y/y % chg.
CY 2018 CY 2019 CY 2020
Notes: 1. Figures are on a U.S. dollar denominated basis.
2. In the left-hand graph, figures for CY 2018 in the forecasts made in spring 2019 are actual figures. Others are forecasts.
Source: WSTS Inc.
Chart 6
Real GDP Growth and
Breakdown by Component
ann., q/q % chg.
15
10
5
0
-5
Private consumption
Private business fixed investment, etc.
Government spending
-10
Exports
Imports
-15
Change in inventories, etc.
Real GDP
-20
CY 13 14 15 16 17 18 19
CY 2013 14 15 16 17 18 19
Chart 7
Outlook for Economic Activity and Prices
(July 2019 Outlook Report)
medians of Policy Board members' forecasts, y/y % chg.
CPI (all (Reference) Excluding the
effects of the consumption
Real GDP items less
tax hike and policies
concerning the provision of
fresh food)
free education
Fiscal 2019 +0.7 +1.0 +0.8
Forecasts made in April 2019 +0.8 +1.1 +0.9
Fiscal 2020 +0.9 +1.3 +1.2
Forecasts made in April 2019
+0.9 +1.4 +1.3
Fiscal 2021 +1.1 +1.6
Forecasts made in April 2019
+1.2 +1.6
Chart 8
Real Exports
Breakdown by Region y/y % chg. s.a., q/q % chg. s.a., m/m % chg.
CY 2018 2019 2019
2017 2018 Q3 Q4 Q1 Q2 Q3 May June July
3.4 2.3 -0.2 4.1 0.3 4.7 -2.0 -5.3 2.8 -1.9
United States
4.6 6.1 -3.6 2.9 2.0 -3.4 6.7 -10.1 8.8 4.7
EU
9.0 3.2 -0.1 -0.6 -3.2 0.5 -1.0 -6.3 7.4 -3.5
Asia
14.1 5.9 -0.4 -0.5 -5.4 1.6 -2.7 -0.4 2.4 -4.1
China
6.4 1.8 0.1 -0.8 -1.9 -0.2 -0.3 -9.3 10.3 -3.4
NIEs, ASEAN, etc.
3.1 3.5 -6.9 2.7 -3.0 -2.5 14.2 8.1 -7.2 17.0
Others
6.4 2.2 -1.6 0.5 -1.7 0.1 2.1 -4.5 4.1 0.9
Real exports
Breakdown by Goods y/y % chg. s.a., q/q % chg. s.a., m/m % chg.
CY 2018 2019 2019
2017 2018 Q3 Q4 Q1 Q2 Q3 May June July
1.4 2.5 0.4 3.0 -2.6 3.2 0.4 -6.5 9.2 -3.1
Intermediate goods
5.2 5.6 -2.9 1.9 0.2 -0.1 -1.1 -3.0 -2.3 1.5
Motor vehicles and related goods
8.0 4.1 0.4 -1.1 -3