Japanese Economy News -Weekly Update 9/9/2014

Sept. 9, 2014 - PRLog -- Capetian Asset Management is a world-wide private equity firm with the resources and expertise to source, evaluate, and manage private investments globally in both developed and developing markets and across many industrial and commercial sectors.

Japanese Economy News -Weekly Update 9/9/2014

The world's third largest economy contracted in the 2nd quarter of 2014 according to recent data. For April to June the economy shrunk by 1.8% which was its steepest drop since the Tsunami of 2011 and off the back of expansion of 1.5% for the first quarter.

Largely blamed on the Sales Tax increase in April of 5% to 8% which saw many businesses and households make key, large purchases in the beginning of the year to avoid the increase.

Over 60% of the economy is based on consumer consumption and the latest consumer confidence figures do not bode well for a strong end to the year. With its first drop in 4mths consumer confidence is waning and at 41.2 was just slightly lower than the 41.5 seen in July.

With a decision expected later in December on the second phase of the Sales Tax increase many believe that the Bank of Japan along with the government may need to implement more stimulus before then to turn the failing economy around. The 2nd increase is due to take effect and see the tax increase from 8% to 10%. That would make Japan the only country to increase Sales Tax twice in one year.

With the global economy expanding at around 8/9% for 2014 Japan will need to focus its attention to how it will balance its huge social welfare costs with a reduction its demand for its exports.

It wasnt all bad news however, despite a drop in consumer confidence, Retail Sales increase in July over the previous year by 0.5%, a strong response to the -0.6% seen in June. That would imply that people are now looking at making their remaining large purchases as prices fall before the next phase of Sales Tax increases is implemented.

Key Asian Market Data as of 9/9/2014:

Nikkei 15,728.35 (+0.38%)

Hang Seng: 25,190.45 (-0.20%)

SSE Comp: 2,326.53 (+0.00%)

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