Japan: fall in demand for household loans
Published 17 July 2014
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0.1 Detail
The Bank of Japan (BOJ) released its quarterly bank lending survey yesterday. This showed that the DI for demand for household loans was -10. This represents a fall of 30 points, the biggest ever, from the previous survey. Demand for mortgage loans weakened significantly after a period of robust demand prior to April’s VAT rise. However, banks expect demand for loans from households to recover within the next three months.
The Government also upgraded its overall economic assessment yesterday. It noted that economy was ‘recovering moderately’ and the negative impact from April’s tax rise on consumption was easing.
0.2 Comment
The market consensus for Q3 real GDP growth is 2.7%. This is much higher than the -4.9% analysts expect in Q2 2014. The Government is expected to make a decision on whether to increase consumption tax from 8% to 10% by the end of this year. The key factor will be Q3 real GDP growth, whose second estimate will be released on 8 December (first estimate: 17 November). Most commentators expect that if this shows more than 2% growth, it will provide the government with sufficient justification to proceed and a recovery in demand for household loans will assist with this.
0.3 Disclaimer
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