Boston, MA -- (SBWIRE) -- 09/03/2013 -- Japan Enjoys A Mini-Recovery - But How Long Will It Last?

Japan is enjoying a mini-recovery, as Prime Minister Shinzo Abe encourages wage increases and business spending. The government has tweaked tax policies to encourage companies to hire staff and boost investment. In fact, GDP grew by an annualised, seasonally adjusted, rate of 4.1% in Q113, led by healthy private consumption. There are also positive signs that business confidence is looking up. Abe's ruling Liberal Democratic Party (LDP) wants to do well in Upper House elections due in July, and it knows that it needs to get the economy moving to bring in the votes. BMI believes that growth will pick up over the short term, and we have raised our 2013 GDP forecast to 1.4%, from 0.9% previously. But, at the same time, we believe that the upside will be limited. Because of Japan's continuing fiscal imbalances, we think the current recovery will start to stutter in H213, as rising government debt yields begin to 'squeeze out' private sector credit. In addition, import growth will remain a key drag on externally-driven growth for Japan.

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The immediate outlook for the freight sector is still limited by relatively-slow economic growth, but there are some positives. Japan's exports have started growing moderately. After sharp reductions in capacity, All-Nippon Airways (ANA) and Japan Airlines (JAL) - the country's two main airlines - are making profits again, and also reporting some moderate monthly increases in airfreight carried. There are signs that the country's automobile exports are set to rise, boosting shipping companies active in this specialised area.

Headline Industry Data

- Air freight tonnes forecast to grow by 2.0% in 2013 to 3.145mn tonnes, continuing a recovery after the estimated 24.5% contraction in 2011.
- Road freight tonnes hauled in 2013 forecast to grow 1.9% to 4.739bn tonnes, with average annual growth at 1.5% through to 2017.
- Rail freight tonnes will increase by 0.3% in 2013 to 41.064mn tonnes. We project average annual growth of 0.7% during our forecast period, slower than GDP.
- Port of Tokyo 2013 tonnage throughput forecast to grow 1.5% to 86.559mn tonnes, with average annual growth of 2.0% during our forecast period to 2017.
- Port of Nagoya 2013 tonnage throughput forecast to grow 3.6% to 209.887mn tonnes, with average annual growth of 3.3% over the medium term.
- The real value of Japanese trade will grow by 3.0%, up from 2.5% in 2012. Exports will grow by 2.2%, reversing their -0.3% fall of 2012.

Key Trends and Developments

ANA Leads JAL In Cargo Growth

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