When Abenomics Meets Trump

March 27, 2017

On 24 March 2017, the BCCJ and the ANZCCJ jointly hosted a panel of prominent economists to analyse and discuss American economic policy under the Trump administration, its effects on Japan's economy and the implications for businesses operating in the Japanese market.

The panel discussion was facilitated by the moderator, Ms. Debra Hazleton, General Manager, Global Talent Acquisition & Development Department, Mizuho Financial Group, Inc. Japan, who introduced the three panelists:

  • Peter Eadon-Clarke Head of Global Economics, Macquarie Commodities and Global Markets
  • Junko Nishioka, Chief Economist, Sumitomo Mitsui Banking Corporation
  • Tetsufumi Yamakawa, Managing Director, Chief Economist, Head of Japan Fixed Income Research, Barclays Japan

Yamakawa, who has been with Barclays since 2010, began by examining the financial market trends under Trump and Abenomics. The speaker addressed three key issues; inflation dynamics, policy conduct, and financial markets. Yamakawa then addressed cyclical recovery vs. structural adjustment pressures, demonstrating with leading economic indicators on global trade from Barclays research.

The speaker then gave details on Trump's key economic proposals covering areas such as trade policies, tax policies, spending and healthcare, and made predictions about the timing of the expected economic effects. Yamakawa  concluded by presenting the results of a Barclays macro survey, indicating positive surprises in growth rates, preference in asset allocation, and equity market performance.

Nishioka, Chief Economist, Sumitomo Mitsui Banking Corporation and ranked in the top ten Economist at Annual Nikkei Veritus survey for 5 consecutive years, then proceeded to present SMBC findings on the perfomance of Abenomics since December 2016 and evidence that consolidated earnings largely rely on the US economy. "President Trump apportions blame when comparing trade deficits in China and Japan, but Japan is making considerable commitment to expanding business in the States," said Nishioka, presenting data  on trade, FDI flow and job creation in the US.

The speaker also examined in detail the automobile sector's trade conflict, looking at market share, production levels, car exports and sales. Finally, she presented figures on weak wage growth in Japan as well as structural problems such as the burden of social security.

Peter Eadon-Clarke of Macquarie Commodities and Global Markets then presented, emphasising that the US is turning inward and that one cannot assume any continuity. "In a world where the Americans withdraw, few players know how to operate. President Trump's focus on trade doesn't need Congress, and Japan is very vulnerable. Japan needs to sign a bilateral trade agreement with the US, to further diversify its energy supplies, and to think hard again about the role of nuclear energy."

Eadon-Clarke raised the following key issues:

- President Trump's trade policy putting short Yen trades at risk, as the US is expected to press for a stronger Yen

- Fair trade and the low level of US auto sector exports to Japan look set to become major issues again

- The bull case for Japanese equities is improving corporate efficiency, which would be accelerated by political support for foreign competition in the domestic service sector. FY3/17's total sharholder payout is tracking towards 60%.

In the subsequent Q&A session, BCCJ members asked the panel a wide range of questions, gaining new insights and the latest information on the US-Japan economic relationship.


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