Talking Point  

Trump bodes well for Japan

Trump bodes well for Japan

Japan's economy could be given a significant boost by a US-Japan alliance, analysts have predicted.

According to Jesper Koll, head of Japan for ETF provider WisdomTree, the meeting on 17 November of Japan's Prime Minister Shinzo Abe with Donald Trump, the President-Elect, is likely to "underscore" a strong alliance.

This is likely to have a "positive implication for US-Japan economic and financial relations", Mr Koll said.

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He explained there are many similarities between Mr Abe and Mr Trump, not least the fact "both men have more or less explicitly build their popular support at least in part by trying to stand up to the rise of China".

Mr Koll said: "Team Abe has deep-rooted connections to the Republican Party. Barely a year in power, in September 2013, Mr Abe became the first non-American to be awarded the Herman Kahn Award from the conservative Hudson Institute.

"Within hours after the US election result was confirmed, Team Abe worked overtime to secure a meeting with the President-elect. Securing the first high-profile global leader meeting is poised to have many advantages.

"Mr Abe’s first-mover visit will give the President-elect a high-profile chance to look Presidential on the global stage. The US-Japan economic and security relationship will mark the start of Trump’s global leadership."

He added that as "Team Abe" has an excellent track-record of promoting direct foreign investment by industrial Japan.

"It is not unreasonable, in our view, to foresee a commitment to build added US factories and raise Japan’s investment into America as a result of this meeting."

It is not just international politics and possible alliances that have boosted Japan in recent days; a weak Yen has also benefited Japan's exporters, and helped to bolster the country's GDP figures, according to Katsunori Kitakura, lead strategist at SuMi Trust.

The third quarter 2016 preliminary GDP results outstripped the 0.8 per cent market forecast, with more than 2.2 per cent annualised growth.

This was largely due to stronger than expected export growth. Mr Kitakura said: "Mr Trump’s election victory and the ensuing weak yen have created a sense of relief for exporters, while strong GDP figures for Q3 2016 have also added to market optimism. 

“External demand has been a key contributor to growth during the quarter with exports up 2.0 per cent year on year.

"The BOJ’s decision to not lower interest rates further into negative territory, combined with speculation over a Fed rate hike in December, saw exports rise during July to September, as any appreciation of the yen was halted.

“For the remainder of the year, exporters will continue to be the key growth driver. Trump’s policies are likely to be inflationary and should accelerate the rise in interest rates.