Japan finds way to prosperity via tax rate increase – Part 2

The yen traded little changed today at 77.04 per dollar as of 2:44 p.m., compared with the postwar high of 75.35 reached on Oct. 31. Toyota Motor Corp. Chief Executive Officer Akio Toyoda said this month the “ideal” rate is 90. Asia’s largest automaker cut its profit forecast by more than half in December.

A government report tomorrow may show a 170 billion yen ($2 billion) merchandise trade deficit for December, the median estimate in a Bloomberg News survey shows. That would cap the first annual excess of imports over exports since 1980, Finance Ministry data show. While the figure reflects disruptions to factories after the March 2011 earthquake, UBS AG analysts this month projected that net exports won’t contribute to growth again until 2013.

Among other economic releases today, India’s central bank cut the cash reserve ratio to 5.5 percent from 6 percent and signaled future cuts. The International Monetary Fund will unveil revisions to its World Economic Outlook at 10 a.m. in Washington. Without giving specific estimates, IMF Managing Director Christine Lagarde said yesterday in Berlin that “we will lower growth forecasts for most parts of the world.”

In Europe, preliminary reports on French manufacturing and services may show both deteriorated this month, according to economists’ estimates before purchasing managers surveys are released. Similar reports from Germany and a broader measure for the euro region may show manufacturing and services improving, other surveys of economists showed. A report on Russia’s unemployment rate is forecast to show an increase in December to 6.6 percent from 6.3 percent.

In Japan, the central bank today kept its asset-buying fund at 20 trillion yen, and its credit-lending program at 35 trillion yen. The benchmark rate was held in a range of zero to 0.1 percent. The unanimous decisions were in line with predictions of all 14 economists surveyed by Bloomberg News.

Noda, speaking at the opening session for 2012 of the Diet, called for improved coordination with the Bank of Japan on addressing the yen and deflation, which has afflicted the nation for more than a decade. Finance Minister Jun Azumi told lawmakers that letting public finances deteriorate further would present a “significant risk to stable economic growth” and that efforts to contain debt should be made “as soon as possible.”

“Further fiscal improvements would be necessary” to meet the goal of a primary budget balance in the 2020 fiscal year, the Cabinet Office said today.

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Posted by Usman Khalid on Jan 24 2012. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.