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HomeEconomyJapan wage growth to lag inflation in next 12 months: Reuters poll

Japan wage growth to lag inflation in next 12 months: Reuters poll

by Daniel Leussink

TOKYO (Reuters) – Japanese wages are unlikely to rise as much as national consumer prices in the coming year, almost 80% of economists said in a Reuters poll that would be bad news for an economy that has seen little real wage growth for more than 20 years.

– The largest economy is likely to expand at a much slower pace this quarter than previously expected due to slowdowns in the U.S., China and Europe, surveys show.

Nominal wage growth will lag price increases, raising the risk of households tightening their wallets, further hurting the economy.

“It is certain that future price growth will be (higher than wages) months,” T&D Asset said Hiroshi Namioka, chief strategist and fund manager at Management.

“Although wages are rising, it is difficult to expect them to increase more than CPI.”

Average wages in Japan since early 1990 It has barely risen since and was the lowest among the G7 economies last year, according to OECD data.

While there are some signs that wages are picking up as a rapidly ageing population exacerbates labor shortages, unions are likely to demand bigger and bigger raises next year.

Nominal wages in Japan are highly unlikely to grow faster than headline year-on-year inflation in the next 12 months, nine of which month

economists said.

Among the remaining 11 economists, another 11 Says nominal wages are unlikely to outpace inflation over the same period. While six other economists expect consumer prices to grow faster than wages next year, none chose “highly likely.”

The national headline inflation rate recently hit a near eight-year high of 2.6%, which has remained above 2% for four consecutive months through July, driven by rising global fuel and raw material prices.

Whether wage increases will follow broader trends will ultimately depend on what strategy the country’s many small and medium-sized businesses take, said Takumi Kakuda, senior economist at Shinkin Central Bank Research Institute.

Raw material prices and more,” he said.

Lower growth

Analysts on gloomy global outlook Economic growth forecasts have been revised down.

Japan’s economy is now expected to grow at an annualized rate of 2.0% in the three months to September, with a median of 38 economic august -24 sts in opinion polls show lower than july 3.1% of estimates in the survey.

Growth will stagnate in the current quarter, one economist estimates.

Fears of a global slowdown intensify, in part due to European concerns over Russia The impact of the war in Ukraine is causing analysts to also become more pessimistic about Japan’s economic outlook.

The Japanese government said this month that the economy grew at an annualized rate of 2.2% in April-June, The median growth rate was below consensus expectations of 2.5%.

Economists polled slightly raised their forecasts for the final quarter of the year, expecting the economy to expand at an annual rate of another 2.2%, up from the previous month The survey expected a 2.0% increase.

The survey also found that core consumer prices, excluding volatile fresh food prices, would rise 2.3% in the fiscal year ending in March next year. The economy will grow by 1.1% in the fiscal year 2023 .

The economy will grow by 1.7% this fiscal year, the f survey shows, Fiscal 2023 is expected to grow 1.3%, both lower than higher forecasts in July.

(Other reports on Reuters Global Economic Survey:)



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