日本经济分析

Issue No: 08/15

2008 年 6 月 16 日 高华经济研究网站
经济研究来自高华客户网
https://portal.ghsl.cn

通胀的迹象：“感受通胀”快速上升
Tetsufumi Yamakawa 由于国际市场上大宗商品价格大幅攀升， 价格上涨逐渐向购买频率较高的商品转移
tetsufumi.yamakawa@gs.com 目前日本的消费价格也正在加速上涨。5 不同购买频率的消费品的通胀
+81 3 6437 9960
月 份 CGPI 指 数 同 比 增 幅 从 4 月 份 的 (yoy % chg)
4
3.9%上升至 4.7% ，表明基本材料/原材料
Yuriko Tanaka 价格的上涨正在逐渐被转移到中间/最终产 3

yuriko.tanaka@gs.com 品上来。 2
+81 3 6437 9964
1
同时，近期 CPI 的上升主要集中在食品和
0
以汽油为主的石油相关产品领域。4 月份
Chiwoong Lee
chiwoong.lee@gs.com 核心 CPI 同比增幅为 0.9%，但不包括食 -1

+81 3 6437 9984 品和能源价格的“核心的核心 CPI”增幅 -2

仍处于-0.1%的低位。 -3 More than 15 times 4.5 - 9 times

-4 Less than 0.5 times

此轮价格上涨与以往的不同之处在于，它
主要集中在食品等购买频率较高的商品领 -5
06 07 4/08
08
域。按照不同购买频率对 CPI 进行分解
后，我们发现食品、汽油和水、电、气的 资料来源：日本总务省
价格仍在继续大幅加速上升，而消费者购
买频率较低的商品如电脑、汽车等耐用消
计入购买频率因素的“感受通胀”远高于官
费品的价格却在持续下降。
方统计通胀
4 月份经购买频率因素调整后的核心 CPI CPI 通胀：“感受通胀”和官方统计通胀
同比增幅为 2.0%，远高于官方统计的核 6
(yoy % chg)

心通胀数据。此外，经购买频率因素调整 Energy (+5.2%)

后的总体通胀率为 2.8%，这表明消费者 5

感受到的通胀率比名义通胀率的上升速度
4
要快。
3
市场预期日本央行在年中之前加息的概率 Perceived core
CPI: +2.8%
为 50%。虽然我们认为目前加息的时机尚 2

不成熟，但随着“感受通胀”的上升，今 Food
1 (+2.5%) Core services
年年内某个时间加息的风险已经浮现出 (+0.2%)
来，而这种情景在 08 财年末时曾难以想 0
象。 Housing (+0.1%) Core goods (-0.3%)
-1

资料来源：日本总务省、高盛经济研究

重要信息披露见本报告最后部分
Japan Economics Analyst
Issue No: 08/15
June 16, 2008 GAO HUA ECONOMIC WEBSITE
Economic Research from the Gao Hua Portal
at https://portal.ghsl.cn

Signs of Inflation: Perceived Inflation Rising Rapidly

Tetsufumi Yamakawa Even in Japan, consumer prices are now Price Rises Skewed Toward Items that
tetsufumi.yamakawa@gs.com rising at a quickening pace on sharply higher Consumer Purchase Frequently
+44 20 7774 5061 international commodity prices. The CGPI CPI Inflation by Purchase Frequency
accelerated to a 4.7% yoy rise in May (from (yoy % chg)
4
3.9% in April), indicating that higher
Yuriko Tanaka basic/raw material prices are gradually being 3
yuriko.tanaka@gs.com passed through to intermediate/final goods.
+81 3 6437 9964 2

In the meantime, the recent rise in the CPI is 1

largely skewed toward food and petroleum- 0

Chiwoong Lee
chiwoong.lee@gs.com
related products, primarily gasoline. The core
-1
+81 3 6437 9984 CPI rose 0.9% yoy in April, but the core-core
CPI, which excludes food and energy prices, -2

remained stagnant, at -0.1%. -3 More than 15 times 4.5 - 9 times

-4 Less than 0.5 times

The current price rises are somewhat unusual
in that they are concentrated in items such as -5
food that consumers purchase frequently. A 06 07 4/08
08

breakdown by purchasing frequency shows Source: MIC.

that the pace of CPI inflation continues to
accelerate sharply in items such as food,
gasoline, and utility bills, while the CPI Perceived Inflation, Taking into Account
conversely continues to decline in items that Purchasing Frequency, Far Surpasses
consumers purchase less frequently, such as Official Inflation
PCs, cars, and other consumer durables. CPI Inflation: Perceived Inflation vs.
Official Inflation
Core CPI inflation adjusted for purchasing (yoy % chg)
6
frequency rose 2.0% yoy in April, far
Energy (+5.2%)
surpassing the rise in the official core CPI.
5
Moreover, CPI inflation adjusted only for
purchasing frequency posted a rise of 2.8%. 4
This indicates that the inflation rate as
perceived by consumers is accelerating faster 3
than the nominal inflation rate. Perceived core
CPI: +2.8%
2
The markets have factored in a 50% Food
probability that the BOJ will raise rates by 1 (+2.5%) Core services
(+0.2%)
mid-year. Although we think a rate hike at
0
this point would be premature, risk is
Housing (+0.1%)
emerging of a rate hike sometime this year in -1
Core goods (-0.3%)

conjunction with the pickup in perceived

inflation, a scenario that was inconceivable at Source: MIC, Goldman Sachs Economic Research.
the end of FY3/08.

Important disclosures appear at the back of this document

Goldman Sachs Economic Research Japan Economics Analyst

Weekly Wrap-Up
Real Economy: Capex Entering a Correction Exhibit 2: Key Economic Indicators Have
Reverted to Negative Surprises Since April
A correction has begun in capex. Private-sector GS Surprise Index
machinery orders (excluding shipbuilding and electric 1.5
(index; standard deviation)
power), which lead machinery orders by 3-6 months Overall
especially in the manufacturing sector, rose for the first 1.0 of which household-related
time in three months in April, +5.5% mom (vs. -8.3%
in March), but this was not enough to offset sharp 0.5
declines seen through February-March. While we
expect April-June orders to top companies’ order 0.0
forecast made in March calling for a 10.4% sequential
contraction (vs. +2.2% in January-March), we estimate -0.5
they will post the first decline in four quarters, in what
is partly a falloff from the previous quarter, when -1.0 Negative surprise
growth was sustained in part by special factors.
-1.5
There were expectations that construction spending 05/1 06/1 07/1 08/15/08

would drive capex in place of machinery investment,
which is slowing due to a tapering off in upgrade
investments. However, construction spending remains
stagnant owing to the lingering impact of the revised
Building Standards Law and a sharp rise is
construction material prices (see Exhibit 1).
January-March GDP was revised up to +4.0%
sequentially annualized in the second provisional
release (preliminary +3.3%) with support from
unexpected capex strength, but the leading indicators
signal loss of capex momentum from April-June, when
we expect GDP to slow to around zero growth after
two brisk quarters (October-December +2.9%). Our
surprise index, which gauges the difference between
market forecasts and actual numbers for key indicators
such as GDP, has switched back to negative surprises
after positives in January-March (see Exhibit 2).
Exhibit 1: Leading Indicators of Capex Stalled
Leading Indicators and Capex
(yoy % chg)
40
Capex (MOF data)
30 Machinery orders (core private)
Capital goods shipment
20
10
0
-10
Source: Goldman Sachs Economic Research Group.
Multiple indicators suggest the economy may be in a
short recession. Although the coincident index for
business conditions, which is an indicator of
momentum, inched up to 92.8 in April (March 90.8,
2005=100), its moving average is trending down from
a July 2007 peak. The Cabinet Office, which makes
formal judgments on the economic situation, has
revised its assessment from expansion to possible
contraction. Our recession probability index, which
estimates the likelihood of recession in three to six
months, remains in the danger zone, at 65.6% as of
April (March 80.9%). However, there should be no
more than a short recession if export slowdown is
temporary (see Exhibit 3).
Exhibit 3: Recession Probability is High But...
GS Recession Probability Index
(%)
100
90
80
Order
outlook 70
60
50
40
30
20
10

-20 0
81 83 85 87 89 91 93 95 97 99 01 03 05 07
4/08
-30
Note: Shaded areas show economic recession.
90 92 94 96 98 00 02 04 06 Q2/08
08 Source: Goldman Sachs Economic Research Group.
Source: Cabinet Office, METI.

Issue No: 08/15 2 June 16, 2008

kWtZlXpVoPyRwPpQ6MaO7NsQnNtRoMfQnNtPfQtRpR8OnNvMvPmPrOuOoPwP
Goldman Sachs Economic Research
Monetary Policy / BOJ Watch:
Too Early for Rate Hike This Year
Emerging inflation concerns in major economies are
stoking market expectations for a rate hike. Markets
started seriously factoring in the possibility of a rate
hike in Japan as well, with the expected rate hike
probability in the OIS market (the aggregate
probability of a 25-bp rate hike by the September
Monetary Policy Board meeting) reaching 50% as of
June 13. This stands in stark contrast to the situation at
the end of FY3/08, when the markets were factoring in
a rate cut (see Exhibit 4).
As BOJ Governor Shirakawa has noted, there is little
risk of the BOJ making an early rate hike in the face of
mounting risk of a near-term economic downturn. It is
especially difficult to imagine the BOJ beginning to
tighten monetary policy ahead of other central banks in
major Western economies. We still think a rate hike
this year would be premature. We do, however, expect
the market to continue factoring in the possibility of a
rate hike as the expected inflation rate accelerates, as
symbolized by the rise in consumers’ perceived
inflation rate.
As BOJ Governor Shirakawa has noted, there is little
chance of the BOJ making an early rate hike in the
face of mounting risk of a near-term economic
downturn. It is especially difficult to imagine the BOJ
beginning to tighten monetary policy ahead of other
central banks in major Western economies. We still
think a rate hike this year would be premature. We do,
however, expect the market to continue factoring in the
possibility of a rate hike as the expected inflation rate
accelerates, as symbolized by the rise in consumers’
perceived inflation rate.
Exhibit 4: Expected Rate Hike Probability in
Market Up Sharply
Rate Hike / Cut Probability in OIS Market
(%)
150
Rate hike
probability
100
50
0
6/13 MPM
8/19 MPM
-50
10/7 MPM
Rate cut
probability 12/19 MPM
-100
1/1 1/31 3/1 3/31 4/30 5/30
6/13
Source: Goldman Sachs Economic Research.
Issue No: 08/15
Japan Economics Analyst
Financial Market Developments:
Why We Should Buy Japan Now?
Investment money continues to flow into Japanese
stocks. In meetings with investors in Japan and abroad
over the past several months, we have frequently heard
comments to the following effect explaining the
pickup in Japanese equity investments (see Exhibit 5).
First, Japan is the only major economy with a high
tolerance for inflation. Further increases in inflationary
pressures would produce a significant deterioration in
the growth-inflation trade-off in major Western
economies, while at the same time further reducing
their monetary policy latitude. By contrast, the impact
of inflation would be much less negative in Japan,
which is transitioning into a reflationary stage. Second,
as emerging economies in Asia struggle with a
deterioration in their trade balances due to sharply
higher crude oil and food prices and accelerating
inflation (monetary tightening), investment money that
was flowing largely into these economies is now
returning to relatively stable and liquid Japanese stocks
in search of “safe heaven.” Third, we cannot overlook
the attention being paid once again to energy
consumption efficiency in Japan amid a prolonged rise
in crude oil prices.
Whether the return of investment money to Japanese
stocks ends up being a case of a temporary flight to
safety, or is the start of a serious stock market rally
will depend greatly on the degree of sustained ROE
growth achieved by Japanese companies as well as the
factors mentioned above. As long as global inflation
remains a major market theme, however, we expect the
Japanese market to continue to have an advantage in
terms to attracting investment money for some time.
Exhibit 5:
Pickup in Return of Investment Money to Japan
Japanese Equity Investments by Foreign Investors
(¥ tn)
2.5
2.0
Net
1.5
purchase
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
05 06 07 08 /6
Note: up to June 7.
Source: MOF.
3 June 16, 2008
Goldman Sachs Economic Research Japan Economics Analyst

Signs of Inflation: Perceived Inflation Rising Rapidly

Introduction
Even in Japan consumer prices are now rising at an
ever faster pace on sharply higher international
commodity prices. The corporate goods price index
(CGPI) accelerated to a 4.7% yoy rise in May (from
3.9% in April), indicating that higher basic/raw
material prices are gradually being passed through to
intermediate/final goods.
The recent rise in the CPI is largely skewed toward
food and petroleum-related products, primarily
gasoline. The core CPI, excluding fresh foods, rose
0.9% yoy in April (+1.2% in March), but the core-core
CPI, which excludes food and energy prices, remained
near zero, at -0.1% (+0.1%).
The current price rises are somewhat unusual in that
they are concentrated in items such as food that
consumers purchase frequently. A breakdown by
purchasing frequency shows that the pace of CPI
inflation continues to accelerate sharply in items such
as food, gasoline, and utility bills, while the CPI
conversely continues to decline in items that
consumers purchase less frequently, such as PCs, cars,
and other consumer durables.
sharply rising crude oil and other international
commodity prices. The rise in the CGPI widened to
4.7% yoy in May (from 3.9% in April), the highest
increase since February 1981 (+5.6%). A breakdown
by production stage shows that price rises at the
basic/raw materials stage continue to lead the upward
price trend (domestic basic/raw material prices rose
15.9% in May), but higher prices are gradually being
passed through to intermediate goods (+6.4%) and
final goods (+1.4%; see Exhibit 6).
The CPI also shows evidence of a pickup in the pace
of price rises. The core CPI, which excludes only fresh
foods, rose 0.9% yoy in April (+1.2% in March).
Recent price increases, however, are concentrated
almost exclusively in daily necessities—primarily
gasoline and other petroleum-related products (3.7%
weighting in the national CPI) and food (22.7%).
Petroleum-related products were responsible for 0.3
percentage point, or 33%, of core CPI inflation in
April while foods (excluding fresh foods) were
responsible for 0.6 pp, or 63%. This is in contrast to
price rises during past oil crises, when prices rose on a
wide range of goods (see Exhibit 7).

Core CPI inflation adjusted for purchasing frequency

as well as each item’s weighting in overall
consumption expenditures rose 2.0% yoy in April
(2.6% in March), far surpassing the rise in the official
core CPI. Moreover, CPI inflation adjusted only for
purchasing frequency posted a rise of 2.8% (2.3%).
This indicates that the inflation rate as perceived by
consumers (the expected inflation rate) is accelerating
faster than the nominal inflation rate.
Exhibit 6: Prices Being Passed Through to
The BOJ is concerned about the pickup in expected
Intermediate/Final Goods
inflation, but it has no choice for now but to maintain
CGPI by Production Stage
current monetary policy, which is shaped by the risks
(yoy % chg) (yoy % chg)
of economic weakness. The markets have factored in a 40 8
50% probability that the BOJ will raise rates by mid- Raw materials (lhs)
30 Intermediate materials (rhs) 6
year. Although we think a rate hike at this point would
Final goods (rhs)
be premature, risk is emerging of a rate hike sometime 20 4
this year in conjunction with the pickup in perceived
10 2
inflation, a scenario that was inconceivable at the end
of FY3/08. 0 0

-10 -2
Price Trends: Price Pass-Through Gaining
Traction, However… -20 -4

Consumer prices are rising at an ever faster pace even -30 -6

in Japan, after a prolonged period of deflation, on 99 00 01 02 03 04 05 06 07 08
1/08

Source: BOJ.

Issue No: 08/15 4 June 16, 2008

Goldman Sachs Economic Research Japan Economics Analyst

Exhibit 7: Price Rises Concentrated in CPI by Purchasing Frequency:

Petroleum Products and Food
Price Rises Concentrated in Goods with High
Breakdown of Price Increases:
Now vs. Previous Oil Crises Purchasing Frequency
(yoy % chg)
25 One major characteristic of the current price increases
Others is that they are concentrated in items such as
20 Food
petroleum products and food that consumers purchase
Energy
frequently. Conversely, prices continue to decline,
15 including real price declines resulting from quality
Core CPI
enhancements, on automobiles, TVs, PCs, and other
10 consumer durables that consumers purchase less
frequently. Accordingly, the inflation rate as perceived
5 by consumers (the “perceived inflation rate”) is very
likely far higher than the official CPI inflation rate. In
0 a consumer price survey conducted in May, the
percentage of households indicating that they expect
-5
1st　　　　 　 　2nd Current prices to be higher in a year’s time rose to 87.1% from
(1974) (1980)　　 　 　 　(2008-) 86.2% in April, while the expected inflation rate on
Source: MIC. weighted-average basis rose further to 2.94% from
2.85% (see Exhibit 9).
Meanwhile, core-core CPI inflation, which excludes
food and energy prices, has almost ceased declining CPI inflation viewed in terms of purchasing frequency
and is hovering near zero, with a reading of -0.1% yoy clearly reflects this bias in price rises. CPI inflation for
in April (vs. +0.1% in March). CPI inflation is highly a basket of goods that consumers buy 15 or more
correlated with final goods in the CGPI, and amid times a month, consisting chiefly of milk, bread, and
signs in the CGPI that higher basic/raw material prices other food items, stood at +2.4% in April (+3.2% in
are increasingly being passed through to March). Similarly, CPI inflation for items that
intermediate/final goods, core-core CPI inflation is consumers purchase 4.5-9 times per month has
also beginning to gradually accelerate. We expect the accelerated sharply on skyrocketing gasoline prices.
pace of price pass-through to be gradual, however By contrast, CPI inflation for rent and other items that
compared to past periods of rising prices. We are consumers purchase 0.5-1 time per month is stalled at
looking for core CPI inflation to accelerate to +1.7% +0.4% (+0.1%), while CPI inflation for items that
in FY3/09 (vs. +0.3% in FY3/08), but forecast that consumers purchase less than 0.5 times per month,
core-core CPI inflation will pick up to only +0.2% (vs. such as automobiles (and auto insurance), TVs, and
-0.2%). More visible acceleration in core-core CPI PCs, continues to decline sharply, owing in part to real
should come in FYF3/10 (see Exhibit 8). price declines accompanying quality enhancements
(see Exhibits 10 and 11).
Exhibit 8: Exhibit 9: Household Expected Inflation Rate Is
Only a Gradual Rise in the Core-Core CPI Rising Faster
CPI Forecast Expected Inflation Rate by Consumers
(yoy % chg)
(yoy % chg)
2.5 3.5

Overall CPI
2.0 3.0
Core CPI
Excluding food & energy (Core-Core CPI)
1.5 2.5

1.0 2.0

0.5 1.5

0.0 1.0
Our
-0.5 forecasts
0.5

-1.0 0.0
05 06 07 084/08 3/09
09
05 06 07 08 /5
Note: Our forecast for WTI is $134.9bl for FY2008 average Note: Expected inflation rate is calculated by weighted average
(FY2007: $82.2/bl; +64.1%). of household expectation of inflation brackets.
Source: MIC, Goldman Sachs Economic Research. Source: Cabinet Office.
Issue No: 08/15 5 June 16, 2008
Goldman Sachs Economic Research Japan Economics Analyst

Exhibit 10: Price Rises Skewed Toward Items nominal inflation is growing more pronounced (see
that Consumers Purchase Frequently Exhibits 12 and 13).
CPI Inflation by Purchasing Frequency

4
(yoy % chg) Monetary Policy Conduct: Risk of Pickup in
3
Expected Inflation
2 In its economic and price assessment, the BOJ
emphasized the immediate risk of economic weakness
1
while also pointing out intermediate/long-term
0 inflation risks. As BOJ Governor Shirakawa has noted,
-1 the greatest monetary policy concern for the BOJ is
-2
the possibility of further acceleration in expected
inflation rate. As long as the expected inflation rate
-3 More than 15 times 9 - 15 times
remained low amid continued wage declines, there
4.5 - 9 times 1.5 - 4.5 times
-4
0.5 - 1.5 times Less than 0.5 times
was limited risk that the BOJ would fall behind the
-5 yield curve by maintaining the present loose monetary
06 07 08
4/08 policy for an extended period of time. Now, however,
Source: MIC. that the perceived inflation rate is running well above

Exhibit 11: Price Declines Concentrated in Less- Exhibit 12: Perceived Inflation, Taking into
Frequently-Purchased Consumer Durables Account Purchasing Frequency, Far Surpasses
Goods and Services by Purchasing Frequency Nominal Inflation
CPI Inflation: Perceived Inflation vs. Official Inflation
Purchase
Typical Goods / Service (yoy % chg)
frequency
6
Auto (-1.6%), TV (-19.3%), auto insurance fee (-26.6%), Energy (+5.2%)
less than 0.5
personal computers (notebook; -38.8%), 5
times
personal computers (desktop; -18.9%)

House rent (+0.1%), tuition (+0.7%), handbag (-1.4%) 4

0.5 to 1.0
etc.
3
Heating oil (+28.5%), cinema (0.0%)、curry rice (+1.0%) Perceived core
1.5 to 4.5
etc. CPI: +2.8%
2
Mobile phone fee (-0.1%), water bill (-0.1%), gas bill Core
4.5 to 9.0 Food
services
(+3.4%), sparkling liquor (+2.2%), detergent (-1.5%) etc. 1 (+2.5%)
(+0.2%)

Electricity bill (+3.5%), gasoline (+0.7%), beer (+1.1%), 0

9.0 to 15.0
chocolate (+1.3%), tobacco (+0.1%) etc.
Housing (+0.1%) Core goods (-0.3%)
more than Beef (+6.8%), bread (+10.8%), sausage (+7.1%), instant -1
15.0 times noodle (+18.4%)
Source: MIC, Goldman Sachs Economic Research.
Source: MIC, Goldman Sachs Economic Research.
Exhibit 13: Gap Between Perceived Inflation and
Nominal Inflation Steadily Widening
Our US economic research group notes that perceived CPI Inflation: Perceived Inflation vs. Official Inflation
PCE (personal consumption expenditure) inflation in (yoy % chg)
3.0
the United States weighted by purchasing frequency
2.5 Perceived core CPI
(the composite index) rose 5.0% yoy in April, far
Core CPI
surpassing the 3.2% rise in the official PCE rate. 2.0
Similarly, the perceived core CPI inflation rate for
1.5
Japan estimated using the same method rose +2.8% in
April, surpassing the +0.9% rise in the official CPI 1.0
rate. Perceived inflation that takes into account the 0.5
share of overall consumption expenditures as well as
purchasing frequency was up 2.0%, again far 0.0

exceeding the official CPI rate. A simply calculated -0.5

time series for the perceived inflation rate shows that
-1.0
the tendency for perceived inflation to surpass
06 07 4/08
08
Source: MIC, Goldman Sachs Economic Research.
Issue No: 08/15 6 June 16, 2008
Goldman Sachs Economic Research Japan Economics Analyst

the official inflation rate, it is not necessarily safe to Exhibit 14: Decline in Wages Coming to a Halt
assume that the BOJ will continue to keep monetary Wage Trends
policy loose. (yoy % chg; 3-month moving average)
3
A continued pickup in perceived inflation may make More than 5 workers
wage and price inflation more sensitive to the 2 More than 30 workers
5-29 workers
unemployment rate and cause a steepening in the well-
known Phillips Curve, which is presently flat. As a 1
result, the risks associated with the BOJ maintaining
current loose financial conditions will gradually 0
increase. The expected rate hike probability in the OIS
market (the probability of a 25-bp rate hike by the -1
September Monetary Policy Board meeting) has risen
to 50% as of June 13 (vs. a 48% probability at end- -2
March of a rate cut).
-3
We are still forecasting that the BOJ will maintain 95 97 99 01 03 05 07 4/08

current monetary policy throughout FY3/09. There is Note: Ratio of employees are 58% for entities with more than 30
no ruling out the possibility, however, of the BOJ workers and 42% in entities with less than 30 workers
(2006).
raising rates this year on a continued rise in perceived Source: MHLW.
inflation, a scenario that was inconceivable at the end
of FY3/08. Moreover, early rate hikes by major
Western economies prompted by similar factors would Tetsufumi Yamakawa
greatly increase the BOJ’s latitude in monetary policy Lee Chiwoong
conduct.

Meanwhile, nominal wages have been on a downward

trend especially at smaller businesses, but the decline
is beginning to show signs of stopping in spite of the
economic slowdown. The factors that are causing
wages to stop declining are a continued shift from
part-time workers to full-time ones, a tapering off in
the decline in average wages accompanying baby
boomer retirements, and a decline in unpaid overtime.
Many observers are still doubtful about whether or not
the Japanese economy is really shaking off deflation.
The rise in perceived inflation, however, taking place
as wages stop declining, strongly suggests that the
economy is gaining traction in its emergence from
deflation into the inflation phase (see Exhibit 14).

Issue No: 08/15 7 June 16, 2008

Goldman Sachs Economic Research Japan Economics Analyst

RECENT PUBLICATIONS
Japan Economics Analyst
What Surprises Await in 2008?, December 25, 2007
Repercussions of US Recession, January 11, 2008
Higher Crude Oil Prices: Approaching a Critical
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Monetary Easing…Says Who?, January 25, 2008
“R- Words”: Recovery Giving Way to Recession,
February 1, 2008
Is Slowdown in Exports to China the Real Thing?,
February 15, 2008
Next BOJ Governor: Is the Tide about to Turn?,
February 21, 2008
The BOJ Succession in Muddy Water, March 14, 2008
The BOJ’s Challenges, March 24, 2008
Fukuda-nomics Scorecard: Weakened, Shelved and
Stalled, March 28, 2008
Production, Income and Spending: From Virtuous to
Vicious Cycle, April 3, 2008
Renminbi Appreciation: Winners and Losers, April 18,
2008
NPL Disposal and the Real Economy: Crossing the
Rubicon, April 28, 2008
A Real Comeback for the “Reflation Trade”?,
May 12, 2008
Japanese HIA: Shot in the Arm for Capex?,
May 21, 2008

Issue No: 08/15 8 June 16, 2008

Goldman Sachs Economic Research Japan Economics Analyst

Upcoming Releases
Date Time Indicators and events GS Consensus Previous

Jun. 17 8:50 Tertiary Activity Index (Apr.) mom % 0.0% +0.8% +0.3%
20yr JGB Auction

Jun. 19 8:30 Reuters Tankan (Jun.)

Jun. 24 2yr JGB Auction

Jun. 26 14:00 MPM Member Nakamura Speaks

Jun. 27 8:30 Tokyo Area CPI (Jun.)

Overall yoy % +1.2% +0.9%
Excl. fresh food yoy % +1.3% +0.9%
Excl. food and energy yoy % +0.3% +0.1%
8:30 National CPI (May)
Overall yoy % +1.3% +0.8%
Excl. fresh food yoy % +1.5% +0.9%
Excl. food and energy yoy % 0.0% -0.1%
8:30 Labor Market (May)
Unemployment rate 4.0% 4.0%
Job offers to applicants ratio 0.92X 0.93X
8:30 Household Survey (All households; May)
Real consumption spending yoy % -2.0% -2.7%
8:50 Industrial Production (May) mom % +0.3% -0.3%
yoy % +0.8% +1.8%
8:50 Retail Sales (May) yoy % -0.1% +0.1%

TBD 8:50 Customs Cleared Trade (May)

Trade balance -¥65.4 bn ¥497.5 bn
yoy % -116.5% -46.9%

„ April Tertiary Activity Index (√√): Tertiary activity index, which reflects activities in the
nonmanufacturing sector, remains sluggish. We do not expect any recovery in tertiary activity after
declining for two quarters (January-March: -1.0% qoq, October-December: -0.1% qoq). Service sector
activities, which have been relatively firm so far, are also being hit by the deteriorating consumer sentiment.

Note: The importance of the economic indicator in terms of its impact on the market is indicated by “very high:√√√”, “high: √√.”

Issue No: 08/15 9 June 16, 2008

Goldman Sachs Economic Research Japan Economics Analyst

Key Data
Main Economic Forecasts
Calendar year Fiscal year Quarterly
2007* 2008 2009 2007 2008 2009 4Q2007* 1Q2008* 2Q 3Q 4Q 1Q2009 2Q 3Q 4Q
Real GDP (% qoq ann) 2.1 1.5 1.4 1.6 1.3 1.9 2.9 4.0 -1.0 0.7 1.3 1.5 1.9 2.3 2.5
Private consump. 1.5 1.4 1.7 1.4 1.5 2.0 1.5 3.3 0.0 1.0 1.5 2.0 2.0 2.0 2.1
Private capex 2.2 0.4 2.3 0.0 0.7 3.2 4.8 0.7 -3.2 1.0 2.0 2.5 3.5 3.7 3.9
Ind. prod. (yoy % chg) 2.8 0.7 1.3 2.7 0.2 2.2 2.7 2.5 2.3 -0.2 -1.3 -0.1 0.7 1.7 2.7
Corporate profits 7.0 -7.0 5.0
GDP deflator (yoy % chg) -0.8 -1.0 0.3 -1.0 -0.6 0.4 -1.3 -1.5 -1.3 -0.9 -0.2 0.2 0.3 0.3 0.3
Core CPI (yoy % chg) 0.0 1.5 1.0 0.3 1.7 0.8 0.4 1.0 1.4 1.8 1.9 1.6 1.1 0.8 0.6
Current account (¥ tn) 24.8 20.4 19.9 24.6 20.6 19.3 5.5 6.6 4.4 5.4 4.0 6.8 4.5 5.3 3.3
* Show s actual figures

Interest Rate Forecast

(%) 1Q2007* 2Q* 3Q* 4Q* 1Q2008* 2Q 3Q 4Q 1Q2009 2Q 3Q 4Q 1Q2010

Overnight call rate 0.50 0.50 0.50 0.46 0.50 0.50 0.50 0.50 0.50 0.75 0.75 1.00 1.00
Three-month TIBOR 0.70 0.70 0.80 0.86 0.84 0.85 0.85 0.85 0.90 1.15 1.20 1.45 1.45
JGB ten-year 1.66 1.87 1.68 1.50 1.36 1.80 1.80 1.90 1.90 2.00 2.10 2.20 2.15

* Show s actual figures. Note: Yield in BEY basis.

Recent Economic Indicators

2Q2007 3Q 4Q 1Q2008 12/07 1/08 2/08 3/08 4/08 5/08

Real GDP % qoq ann. -2.5 1.1 2.6 3.3

Industrial production % mom 0.6 1.7 0.9 -0.7 0.6 -0.5 1.6 -3.4 -0.2
% yoy 2.3 2.6 3.3 2.3 1.5 2.9 5.1 -0.7 1.9
Tertiary activity % mom 0.7 0.1 -0.1 -1.0 -0.5 0.4 -1.6 0.3
Leading indicator (DI) % 38.9 23.6 23.6 33.4 37.5 41.7 41.7 16.7 30.0

Real household consumption % yoy 0.5 1.6 0.7 0.7 2.2 3.6 0.0 -1.6 -2.7
Retail sales % yoy -0.3 -0.5 0.8 1.8 0.2 1.2 3.2 1.0 0.1
Machinery orders (a) % mom -1.6 1.4 0.6 2.2 -2.8 17.3 -12.3 -8.3 5.5
Housing starts % yoy -2.6 -37.1 -27.3 -9.0 -19.2 -5.7 -5.0 -15.6 -8.7

Export volume (b) % yoy 4.2 5.7 11.2 9.8 7.7 10.3 14.7 5.1 9.0
Import volume (b) % yoy -3.9 -4.9 -2.1 -1.6 -3.7 -1.5 -3.9 0.5 2.6
Trade balance (c) ¥ bn 3,087 3,260 3,012 2,363 712 1,081 486 795 697
Current account balance (c) ¥ bn 6,422 6,299 6,236 5,621 1,741 2,058 1,467 2,097 1,511

Unemployment rate % 3.8 3.8 3.8 3.8 3.8 3.8 3.9 3.8 4.0
CPI Tokyo (excl. fresh food) % yoy 0.0 -0.1 0.1 0.4 0.3 0.4 0.4 0.6 0.7 0.9
Domestic corporate price % yoy 1.8 1.6 2.4 3.4 2.7 3.0 3.5 3.9 3.9 4.7
M2+CDs % yoy 1.5 1.8 2.0 2.2 2.1 2.1 2.3 2.3 1.9

¥/US$ exchange rate (d) ¥/US$ 120.7 117.8 113.1 105.2 112.3 107.7 107.2 100.8 102.5 104.1
Three-month TIBOR (d) % 0.67 0.80 0.85 0.85 0.86 0.85 0.85 0.86 0.84 0.84
Benchmark bond yield (d) % 1.74 1.72 1.57 1.39 1.53 1.42 1.44 1.30 1.41 1.67
Nikkei 225 stock price (d) ¥ 17,689 16,890 15,997 13,294 15,545 13,731 13,548 12,603 13,358 13,995
(a) Private-sector orders, excluding electric power and shipping. (b) Customs cleared. (c) Balance of payments, seasonally adjusted.
(d) Period average.

Issue No: 08/15 10 June 16, 2008

Goldman Sachs Economic Research Japan Economics Analyst

Economic Calendar
Monday Tuesday Wednesday Thursday Friday
June 16 June 17 June 18 June 19 June 20

Tertiary Activity (Apr.) Reuters Tankan (Jun.)

(E): 0.0% mom

[20yr JGB Auction]

June 23 June 24 June 25 June 26 June 27

Customs-Cleared MPM Member CPI (Jun./May)

Trade (TBD; May) Nakamura Speaks Excl. fresh food
(E): -¥65.4 bn Tokyo Jun. (E): +1.3% yoy
Nation. May (E): +1.5% yoy

Industrial Production Labor Market (May)

(May) Unempl. rate (E): 4.0%
(E): +0.3% mom Job offers/appl. (E): 0.92X

Retail Sales (May) Household Survey

FOMC (E): -0.1% yoy (All households; May)
Real spending
[20yr JGB Auction] FOMC (E): -2.0% yoy

June 30 July 1 July 2 July 3 July 4

Housing Starts (May) BOJ Tankan (Jun.) Leading Indicator (May)

Monthly Labor Stat.

(May) [10yr JGB Auction]

July 7 July 8 July 9 July 10 July 11

Money Stock (Jun.) Machinery Orders Corporate Price (Jun.) Mfg. Operating Rate
(May) (May)
Balance of Payments
(May) Consumer Confidence
[5yr JGB Auction] (Jun.)

July 14 July 15 July 16 July 17 July 18

Monetary Policy Monetary Policy Tertiary Activity (May) Reuters Tankan (Jul.)
Meeting Meeting

BOJ Governor's
Press Conf. [30yr JGB Auction]

July 21 July 22 July 23 July 24 July 25

Customs-Cleared CPI (Jul./Jun.)

HOLIDAY Trade (TBD; Jun.)

[20yr JGB Auction]

Issue No: 08/15 11 June 16, 2008

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