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    Japan’s economy to growth just 0.3%; BoJ likely to ease further - Wells FargoMatías Salord

    Analysts from Wells Fargo, forecast that the Japan real GDP will growth 0.3% during 2016 and 1.2% in 2017 and they see more easing from the Bank of Japan.Key Quotes:“Real GDP in Japan expanded 0.5 percent (1.9 percent annualized) on a sequential basis in the first quarter. The details were somewhat less encouraging, as the solid read was partially driven by a boost from net exports, while fixed investment spending contracted in Q1, marking the third sequential drop in four quarters. As a further reflection of the ongoing underlying weakness in the Japanese economy, real GDP grew just 0.1 percent on a year-over-year basis in the first quarter. We forecast Japanese real GDP growth of just 0.3 percent this year and 1.2 percent in 2017.”“At its latest policy meeting, the Bank of Japan (BoJ) surprised financial markets by not adjusting any of its various rates or adjusting the pace of its quantitative and qualitative easing program. The surprise inaction may in part reflect a desire among BoJ policymakers to wait until the effects of the negative interest rate policy can be more fully evaluated. The risks of any near-term stimulus may have diminished as Japan postponed a 2 percentage point hike in the national sales tax until 2019. However, underlying inflation in Japan clearly remains weak.”“Moreover, BoJ officials lowered their inflation forecasts for 2017 in their April assessment. Looking ahead, we suspect that the BoJ will eventually look to ease monetary policy further until the inflation dynamics begin to firm in a meaningful way.” 


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