Mizuho Financial Global: East Asia Economies Slowing Amid Apprehension

Weaker than expected trading activity in China and India and anxieties concerning the United States quantitative easing programme is holding back Asia’s growth prospects this year. Growth in Asia and the Pacific will likely result in diminished figures when judged against earlier projections. While economic activity will probably approach more sturdy levels next year, circumstances dictate that the region needs to be attentive so as to defend against financial instability in the short term and accelerate structural reforms in order to support economic growth over the longer term.

In an update to reports from financial analysts at Mizuho Financial Global, they have revised figures of gross domestic product downwards and reset their growth forecast for the region to 6% from 6.6% predicted in April. There have been fluctuating expectations on when the US Federal Reserve’s QE program would be wound back, which has generated an exodus of foreign capital from emerging markets, especially from India and Indonesia. While sudden outflows of capital have unmasked certain vulnerabilities in the region, it has substantial current account surpluses and adequate foreign exchange reserves.

However, capital flow instability highlights the need to monitor the financial markets closely and the need to push ahead with belated reforms in foreign direct investment, infrastructure development, fiscal consolidation and social protection programmes, in order to generate growth over the long term. While China’s recent endeavours to restrict credit and the shadow banking system, the authorities are hoping to redirect the economy along a more supportable growth path and recognise the slowing of India’s economy has been due to industry and investment bottlenecks resulting from weak infrastructure and deferred structural reforms.

According to financial analysts at Mizuho Financial Global, although weak performances, lacklustre exports and moderating investment currently that will curtail Southeast Asia’s growth, affecting Thailand, Indonesia and Malaysia, surprisingly, the Philippines economy is predicted to perform strongly. The region is predicted to grow by 4.9 per cent this year, with the pace quickening to 5.3 per cent next year as investment recovery and stronger exports, reinforced by enhanced global trade and currency depreciations reignites.

About Mizuho Financial Global:
Mizuho Financial Global is an independent, full-service brokerage, wealth management and business management concern dedicated to providing pioneering capital appreciation and wealth preservation solutions to affluent individuals and families and businesses.

Without exception, they place the welfare of their clients first and foremost and they take great pride in knowing that they are the first port of call for their investment and financial affairs. They constantly exceed our clients’ expectations by going the extra mile to deliver the service and, most importantly, the returns on investment their patronage demands.

Contact:
Address: SHINAGAWA CRYSTAL SQUARE BLDG. Suite No. 901,
1-6-41, Kounan, Minato-ku,
Tokyo, 108-0075
JAPAN

Telephone: +81-3-5782-8708
Facsimile: +81-3-5782-8707
http://www.mizuhoglobal.com
info@mizuhoglobal.com

Mizuho Financial Global: Japan Still Short of a Plan to Address Debt

“Abenomics”, the creation of Prime Minister Shinzo Abe, is already having an effect and has had investors cheering as renewed government spending and radical monetary easing aimed at ending 15 years of deflation in Japan, were initiated. The yen has devalued sharply and stocks are riding high, with the IMF sanctioning it amid Japan just avoided being accused of currency manipulation. But analysts at Mizuho Financial Global warn that it would be prudent for Japan to address its rising debt levels with comparable vigour by cutting welfare benefits and raising taxes in the medium term.

The problem is that the situation in Japan is so severe its gross public debt is projected to reach 230 per cent of GDP by 2014. The OECD gave its approval to Abenomics in a recent report but advised Japan to do far more in arresting increasing debt, saying that a reversal in the rise in the debt-to-GDP ratio is crucial. The same applies to the IMF, that want to see Japan prepare more ambitious plans to tackle the debt crisis that also include structural reforms to shift the economy into “higher gear”.

For years Japan’s low interest rates has allowed it to issue debt and not be inundated with servicing payments and the Japanese people, who are known for their propensity for savings, were content to buy government bonds. In stark contrast to countries such as Greece, nearly all debt in Japan is held domestically. However, risks persist, particularly if interest rates rise, which would add to Japan’s fiscal quandary, thus damaging the economy and the institutions holding government bonds.

Japanese policymakers, especially Finance Minister Taro Aso, have talked of risk mitigation, saying the government are well aware of the issue and that they are paying attention to it. But, even if interest rates remain low, Japan still needs to attend to long-term structural problems to rearrange the economy into a more supportable position. Analysts at Mizuho Financial Global, given the unparalleled extent of its debt ratio and the threat of higher interest rates, say that Japan needs a dependable medium-term plan to include spending cuts, tax increases and enhancements to its fiscal policy framework.

About Mizuho Financial Global:
Mizuho Financial Global is an independent, full-service brokerage, wealth management and business management concern dedicated to providing pioneering capital appreciation and wealth preservation solutions to affluent individuals and families and businesses.

Without exception, they place the welfare of their clients first and foremost and they take great pride in knowing that they are the first port of call for their investment and financial affairs. They constantly exceed our clients’ expectations by going the extra mile to deliver the service and, most importantly, the returns on investment their patronage demands.

Contact:
Address: SHINAGAWA CRYSTAL SQUARE BLDG. Suite No. 901,
1-6-41, Kounan, Minato-ku,
Tokyo, 108-0075
JAPAN

Telephone: +81-3-5782-8708
Facsimile: +81-3-5782-8707
http://www.mizuhoglobal.com
info@mizuhoglobal.com