Japan: New wave of cost driven inflation from protracted war in Iran raising risk of stagflation

The US-Israel war with Iran is about to trigger a new wave of cost push inflation in Japan (Chart 1). While Japan has been highly dependent on foreign energy, Brent oil prices surged to USD 87.8 per barrel from USD 72.5 just before the war erupted on February 28th. The Yen, which depreciated to USDJPY=158.2 from 155.9 during the same period (Chart 2), is expected to amplify into higher import inflation.The protracted conflict in the middle east has raised the risk of stagflation in Japan. As higher import costs are anticipated to be transferred to consumers, real wages are expected to fall onc...

州選挙の結果を受け、ドイツ連立与党に新たな圧力

China's banking goliath: from growth engine to economic drag

China’s banking system has long been utilised as a quasi-government tool to channel China’s huge household savings towards the government’s objectives. This has been instrumental to the country’s economic miracle, yet the support it provides is diminishing as banks face rapidly falling profitability and stretched balance sheets. This will have important consequences for the Chinese economy.Thirty years ago, China lacked a functional financial sector. By 1998, banks were saddled with 50% non-performing loans, prompting a massive recapitalisation. The rebuilt system, centred around four giant, s...