Asia Pacific: August 2016

Economic overview

As growth in Japan remains weak, the government is pushing for another stimulus package to boost the economy.

Japan has seen its annual GDP growth fall in Q2, with expansion of approximately 0.2% in Q2 marking a slowdown from the 2% achieved in Q1, according to preliminary government statistics.;

The Japanese government is hoping a new stimulus package will boost economic activity. New direct spending of around ¥7.5 trillion ($73 billion) will be pumped into the economy, largely over the next two years as part of a wider spending package of ¥28 trillion, expected to be released over several years. The package is another example of Prime Minister Shinzo Abe’s economic programme – known as Abenomics.

Although the move is expected to help boost growth in the short term, sustaining higher levels of increased economic expansion still looks like a challenge. Demand for gas also remains weak. Imports into Japan fell by roughly 6% year on year in June.

In China, the economic slowdown will further reduce GDP growth in H2. Exports fell by 4.4% in July and imports dropped by 12.5%. Faster growth looks increasingly unlikely, in part because of weak domestic demand, which is persisting despite government efforts to boost consumption.

Gas demand in China is expected to continue to increase year on year despite the slower economic growth. Gas consumption could rise by around 7% on an annual basis during the autumn. With the cost of imports having fallen, it is more affordable to import larger volumes of gas, and this is helping to support domestic demand growth.