The Japanese economy is highly likely to remain resilient despite slower normalisation of economic activity in contrast to Europe and the U.S., where fears of entering recession has become a major concern, amidst market focus shifting to corporate earnings and economic trends in the second half of the year.
Four factors underpinning the recovery trend; (i) capital investment demand, (ii) fiscal response to inflation, (iii) easing terms of trade, and (iv) ongoing normalisation of economic activity.
Capital investment boosts economic growth rate and easing of terms of trade benefits corporate earnings amidst ongoing normalisation of economic activity whilst caution against the spread of Covid and overseas economic slowdown remains.