Boston, MA -- (SBWIRE) -- 01/24/2014 -- Growth Still Expected To Slow In 2014

Despite some positive signs, BMI remains rather downbeat about Japan's economic prospects. Prime Minister Shinzo Abe's three policy 'arrows' raised expectations in 2013, but we do not think the initial impetus created is sustainable into 2014. The first two arrows - aggressive monetary and fiscal stimuli - played their part, but the third, a combination of industrial reform and revitalisation appears to be still tied up in legislative negotiation. Despite strong encouragement from the government, a recent Yomiuri survey found that only one third of companies were considering boosting wages, and those that were, were boosting one-off bonuses rather than base pay. After strong quarter-on-quarter (q-o-q) GDP growth of 3.7% in Q213, there was a sharp slowdown to 1.9% in Q313. We have raised our estimate for GDP growth in 2013 to 2.4%, reflecting the slower-than-expected winding down from the initial boost from 'Abenomics'.

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But given our expectation of slower private consumption growth, private sector investment caution, and sluggish net exports, all against a background of continuing fiscal and debt pressures, we are continuing to predict GDP expansion at a modest 1.3% in 2014. The fact that Tokyo has been selected for the 2020 summer Olympics provides some medium term upside, but even here we are cautious about the ability capital spending on the games to lift Japanese growth above trend.

Headline Industry Data

- 2014 Port of Nagoya tonnage forecast to grow by 2.5% to reach 216.647mn tonnes, slower than the 4.3% growth rate achieved the preceding year. Box traffic at the same port will grow by 2.6% to 2.752mn twenty-foot equivalents (TEUs), up from 1% in the preceding year.
- The Port of Tokyo will remain Japan's largest container terminal, with box traffic gaining 4.0% to 5.197mn TEUs, marginally down from 4.3% growth in 2013.
- The Port of Yokohama will see a 1.2% tonnage growth to 117.934mn tonnes (up from 4.0% contraction in the preceding year), and 3.3% container growth to 2.994mn TEUs (up from 5.0% contraction in 2013).
- 2014 total trade growth forecast to expand by 3.5% in real terms, a slowdown on the 4.0% of 2013. Import growth at 4.0% will exceed exports at 3.0%.

Japanese Ships To Have Private Armed Guards

The Japanese government will implement the new anti-piracy law in the country it was reported in November 2013. Under the new law, private armed guards will be allowed to enter Japanese-registered oil tankers and cargo ships in waters offshore Somalia and elsewhere. Private armed guards will also be permitted to fire warning shots into the air or at the water and fire at pirates in self-defence. Shipping companies will have to get approval from the transport minister for their security plans, which mention security companies appointed by them for each vessel.

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