OECD Economic Growth Rate Forecast: Japan Only?!
June 1, 2021 (Tuesday) Clear weather Mercury retrograde (5/30–6/23)
・On the 31st, during a Politburo meeting, the Chinese Communist Party indicated a policy to allow a couple to have a third child.
The number of births in 2020 fell to the largest decline since the founding of the People's Republic of China in 1949.
・The government plans to begin vaccinations at workplaces and universities by late June.
Prime Minister Yoshihide Suga and related ministers confirmed this in a meeting on 5/31.
In addition to government and municipal venues, new options will be provided.
The Health, Labour and Welfare Ministry's study group will also allow vaccination by clinical laboratory technicians and emergency medical technicians.
・NTT <9432> [Closing price 2,931.5 yen] Toshiba <6502> [Closing price 4,595 yen] and 11 companies announced on the 31st that they will establish a council this summer to jointly study quantum technologies for information processing and communications.
Quantum communication and cryptography technologies are closely linked to security advantages, so a public-private joint effort will help regain momentum.
1. Trends in quantum technology 2. Applications in industries 3. Development of materials and components 4. Human resource development 5. Systems and regulatory frameworks; to be investigated and studied.
・Infections from the novel coronavirus are surging in Southeast Asia, where they had been relatively low until now.
Malaysia, expanding at a pace faster than India, will implement a nationwide lockdown (city-wide) from June 1, and
Toyota <7203> [Closing price 9,115 yen] and Honda <7267> [Closing price 3,353.0 yen], among others, will halt factories.
In May, the number of daily infections also reached the highest levels in Thailand and Vietnam.
・Ministry of Economy, Trade and Industry announced on the 31st that it will support a new Japan base to be established by the world’s leading semiconductor company TSMC.
The total project cost is about 37 billion yen, with half to be contributed.
・Despite ongoing spread of the novel coronavirus, online medical consultations have not expanded.
The Ministry of Health, Labour and Welfare reported on the 31st that the share of registered medical institutions as of the end of April is 15.2%, a minor increase of 0.2 points from the end of December 2020.
A contributing factor for delays in new parties is the low remuneration for medical services; in-person visits are more profitable for medical institutions.
・Sony Group <6758> [Closing price 10,785 yen] Suzuki <7269> [Closing price 4,743 yen] and others
will begin investing in new companies with technologies related to digital transformation (DX) and decarbonization.
Venture capital (VC) WiL (California) will participate in a fund to be established in June with a target size of up to 1000 billion yen to discover companies domestically and internationally.
A system where large corporations collaborate with startups possessing unique technologies to solve social issues is set in motion.
・Cyberattack-related security risks have been rising.
A study by the National Institute of Information and Communications Technology (NICT) shows cyberattacks increasing 8.5 times from 2015 to 2020.
The National Police Agency points out that home work environments are targeted more than workplaces because security is weaker.
・In May, major media outlets reported a sharp drop in support for the Suga administration.
This is attributed to the prolonged state of emergency due to the spread of the novel coronavirus and delays in vaccination.
The prime minister aims to suppress infections by accelerating vaccinations and reverse the drop in approval ratings.
・OECD on the 31st forecast global real GDP growth in 2021 at 5.8%.
Taking into account vaccination and other factors, this is a 0.2 point upward revision from the March forecast.
The United States and China are driving the recovery.
While expecting a steady global economic recovery, risks from new variants and inflation are also noted.
・OECD Economic Growth Forecast
World: 2021 5.8% (up 0.2 from March forecast) 2022 4.4%
Japan 2.6% (−0.1) 2.0%; United States 6.9% (0.4) 3.6%; China 8.5% (0.7) 5.8%; Euro area 4.3% (0.4) 4.4%
・Manufacturing activity is strong.
April’s Industrial Production Index (preliminary) +2.5% from the previous month, marking two consecutive months of increase.
Production of semiconductor fabrication equipment and office machinery rose.
Although semiconductor shortages remain a constraint, demand domestically and internationally is solid, and growth is expected to continue in the near term.
・Ministry of Internal Affairs and Communications announced on the 31st that it will establish a system to lower the lending fees for calls that low-cost mobile operators borrow from mobile carriers.
This aims to ease the cost of cheap smartphones to promote competition and lead to lower call charges.
・At the subcommittee of the Ministry of Health, Labour and Welfare’s 31st, regarding the Pfizer COVID-19 vaccine,
the free vaccination target age will be lowered to 12 years and under.
Previously it was 16 and older, but 12–15 will be added. For Moderna, it remains 18 and older.
・Unison Capital (Tokyo, Chiyoda) will enter investments in Indian companies.
Raising about $500 million (about 54 billion yen) from domestic institutional investors, forming a fund to be invested with a government-linked fund there.
Bringing Japan’s operational money into India. Also accumulating venture investment know-how to apply to Japanese businesses.
・Capital inflows into emerging markets are at an unprecedented pace.
In 2021, funds flowing into emerging market equities and bonds through May reached the largest in the past 20 years.
With negative real yields in the United States for an extended period, capital tends to flow into higher-yielding emerging markets seeking returns.
However, if US rates rise sharply as US monetary easing tapers, the flow could reverse and markets could become volatile.
・On the 31st in the foreign exchange market, the yuan briefly hit around 1 USD = 6.35 yuan, the highest in about three years.
In addition to structural factors like a current account surplus and strong international demand, the view is that the US-China confrontation has somewhat eased as the Biden administration takes office.
・The MSCI All Country World Index (ACWI), which measures global stock movements, rose to 815.379 on the 28th, up 2.9 points (0.4%) from the previous day, a 1990 origin value high.
Support from expectations of a global economic recovery led by the US has pushed it to new highs on consecutive days.
・Pat Gelsinger, CEO of Intel, said on the 31st that it could take "a few more years" to resolve the global semiconductor shortage.
He added, "The industry is currently addressing immediate issues. The entire supply chain will need to confront problems going forward."
・As of 4 PM on May 31, the number of COVID-19 infections (and deaths) across countries and regions summarized by Johns Hopkins University: Global total 170.35 million (80,31 deaths)
US 33,259,430 (125) India 28,047,534 (3,128) Brazil 16,515,120 (874) France 5,728,418 (44) Turkey 5,242,911 (134) Russia 5,005,171 (349)
UK 4,499,937 (6) Italy 4,216,003 (44) Argentina 3,753,609 (348) Germany 3,667,715 (34) Spain 3,668,658 (0) Colombia 3,383,279 (535)
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