As expected, the coalition of Shinzo Abe's Liberal Democratic Party and junior partner KOMEITO won two-thirds of the seats in the Diet House of Representatives following the December 14 general elections. The sweeping win will comfortably allow his new Cabinet to continue policies needed to address various economic problems.
However, they will have to brace for certain challenges, notably low inflation, hefty public debt and a recent credit rating downgrade by Moody's Investors Service because this may affect confidence toward the country's trade and investment amid a weakening JPY/USD forex rate.
However, key trade partner economic recoveries led by the US, a steady increase in purchase orders from China and the weaker JPY, should help bolster its outward trade, being a major growth engine for Japan. Domestic investment will likely rise, while growth momentum in private spending should also be sustained since another consumption tax hike has been postponed until 2017. As a result, we at KResearch have assessed that the Japanese economy will expand 1.0 percent in 2015, bettering the 0.7 percent growth projected for 2014.
Given this, we expect that Thailand's export growth to Japan in 2015 will remain at the same level as this year at (-)0.2 percent, or to perhaps 1.5 percent YoY, amounting to USD17,670-22,420 million, versus USD22,090 million YoY projected for 2014, down 0.6 percent. Meanwhile, our imports from Japan during 2015 should resume growth of 4.0-8.0 percent YoY to about USD37,530-38,970 million, compared to USD36,090 million projected for 2014, down 12.2 percent YoY.
Nevertheless, brighter prospects are seen for primary/intermediary exports, since Japan will be requiring them for re-export. Our consumer product exports will likely be affected by sluggish demand there, though.
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