Japan

Japan surpasses stage of deflation

Japanese stocks led the region’s shares to the roof top after four consecutive sessions of decline since the beginning of the new year with a weak demand from investors on the yen. Nikkei 225 closed at 15,383.91, rising by 2.70 % after it dropped by 2.51% in the previous session. JPXNikkei 400 closed in Tokyo at a rise of 2.56% at 11,347.32, in addition to Topix index, which closed higher by 2.60 % at 1,256.18 at the beginning of February. Japan also pumped an economic stimulus package worth about $3 billion to support the economy, in order to reduce the economic impact of the tax rise, which is the biggest step taken by Japan since decades in a bid to reduce its huge debt. The initial budget for the fiscal year April 2014 –March 2015 is equivalent to $922 billion (€ 673 billion). And the new budget relies on the significant tax revenues in an attempt to reduce the deficit. According to the economic data, Japan has surpassed the deflation stage after implementing the plan of monetary and fiscal stimuli policy that has been adopted by Tokyo over the past year, after the core inflation reached 1%, and the core consumer price index, which excludes petroleum products, rose by 0.9 %. The narrower inflation index, which excludes food and energy prices, rose by 0.3 %, and it is considered the first increase within five years and the fastest since August 1998. The Japanese economy slowed down in the third quarter of last year, with a decline in exports and household spending. Yet, economists expect growth to accelerate in the fourth quarter with a recovery in exports and a rise in private sector consumption. Japan classifies the UAE as the largest market for Japanese exports to the region in 2013 and the second largest trading partner in the Middle East after Saudi Arabia. Japan’s total trade with the countries of the Middle East over the past year was about $185.4 billion, compared to $195.9 billion last year, registering a decline of 5.3%. The United Arab Emirates was accounted for 27.7% of the total trade between Japan and the countries of the Middle East during 2013, where the value of its trade with Japan was about $51.4 billion by the end of December last year.