Slide into recession in Q1. -20% contraction expected in Q2. Record budget for growth.
Economic pick-up in Q3. Drop in corporate earnings. Excessive valuation of the Nikkei.
Key Points
Japan’s GDP resisted well to Covid-19 in Q1
Recession is likely to take a turn for the worse in Q2
Record budget approved to support Japan’s economy
Expected rebound of leading indicators
Record -21.9% collapse in exports
Likely pick-up in private consumption and public spending in Q3
BOJ unlikely to change policy
Depreciation of yen to continue in 2020
Decline of -32% in corporate profits in Q1
Beware the excessive valuations of Japanese equities