Research Briefing | Nov 21, 2022

Why we forecast Japan’s resilient growth in 2023

Japan: Why we forecast resilient growth in 2023

We expect the Japanese economy to grow at 0.9% y/y in 2023, after 1.6% growth in 2022. Four reasons why we project the relatively resilient growth compared to other advanced economies: pent-up demand, the key auto industry recovery, supportive policy, and a strong base effect.

What you will learn:

  • Firstly, economic reopening has lagged behind the US and Europe, implying that some of the emerging pent-up demand will carry over to early 2023. 
  • Secondly, Japan’s key auto industry looks poised for recovery, as supply chain disruptions finally subside. Easing supply constraints will encourage auto makers to enhance production to fulfil existing backlogs.
  • Thirdly, both monetary and fiscal policy will remain supportive. We expect interest rates and financial conditions to stay extremely accommodative.
  • Lastly, and technically, the strong base effect from a robust recovery in H2 2022 is also contributing to push up average GDP growth for 2023, which appears superficially stronger than q/q growth momentum.
Back to Resource Hub

Related Resouces


Short-term outlook for cities deteriorates

Many cities in the world's advanced economies will enter recession in 2023, with soaring inflation and tightening monetary and fiscal policy driving down demand. In contrast, the majority of cities in emerging economies will still enjoy robust economic growth.

Find Out More


Look for an L-shaped property recovery with a long tail in China

Policies aimed at managing China's housing slump have led investors to query the shape and depth of a market correction. We think a meltdown is unlikely and that China's housing market will instead undergo a protracted L-shaped downturn.

Find Out More


Easing supply hurdles won’t offset falling industrial demand in APAC

We earlier argued that Asia’s manufacturing activity has been impacted more by demand than by supply-side pressures, due to strict Covid-related policies. Supply constraints in Asia have been less acute than in the US and Europe, and we had forecast resilient industrial growth in 2022 and 2023 as regional demand recovers. But the global growth outlook has deteriorated since then. Following our recent downgrade to 2023 GDP growth forecasts for most Asian economies, we now expect weaker industrial growth in Asia. That said, there will be divergences across the region.

Find Out More